Investor or Collector?

Most of us collect something. For some, it's Beanie Babies. For others, it's baseball cards. Still others collect clothes.  Some people collect investments. They may own a dozen funds in their 401(k) plan, another half dozen funds outside of it, and 25 or so stocks. That's a lot of investments. 

The problem with owning too many funds and stocks is that you can easily lose sight of the forest for the trees. You start out as an investor with an investment goal and a portfolio tailored to you and turn into a collector who has forgotten what your goals are.

How Many Stocks are Enough?

When it comes to stocks, various studies have suggested that you can adequately diversify a portfolio with 15 to 30 stocks. In his 1930s classic,  The Intelligent Investor , Benjamin  Graham said that the magic number was somewhere between 10 and 30 names. In the late 1960s, John Evans and Stephen Archer concluded that 10 stocks were enough. And in the 1970s, Burton Malkiel said 20 stocks will do in A Random Walk Down Wall Street.

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