What is an ideal portfolio size


In the current economic scene, investment and decisions regarding it require dedicated time and great effort. It has become extremely tough to select an investment avenue where we can put in our hard-earned money. Regular investors do know the markets and risks involved but often fail to organize their portfolio.

Even after thorough research and study of the possibilities, things do not work well with some investors. The fact is many individuals (experienced/new investors) find it difficult to maintain the right portfolio size. Well holding a large portfolio may give good results when companies perform well. However, doing the same when the market is sluggish may take a toll on you.

Here comes the importance of rightsizing your portfolio. The key to a successful investment is to own the right number of stocks. Restructuring and reorganizing your stock portfolio is significant for better returns. This would help mold your portfolio for maximum profit. We at Sushil Finance suggest our clients restrict their investment to 15-20 stocks at a time.

By doing so, retail investors would easily track each of these stocks better. This would also ensure you that you have meaningful exposure to each stock you own. Holding more than 15-20 stocks, especially in mid-size companies may not be easy for an individual to manage his/her portfolio without any professional help.

According to financial gurus, an average investor would fail to keep a track of more than 15 businesses at a time. What is to be done to avoid such a situation is to always invest in a business that you know and understand, apart from keeping a close watch over it.

However, experts suggest not to avoid portfolio diversification. The ideal thing to do is to buy stocks across sectors within limits e.g. less than 30% in a sector. A retail investor can initially start with some large-cap names and then go to mid-size companies.

The thumb rule is to limit your exposure to each stock to around 10%. One has to stick to this rule even if he/she has fair understanding of market gyrations and volatility involved in it. It would save one’s portfolio from occasional crashes of stocks.

Investors need to be extra cautious in case of mid and small-size companies. Analysts fail to track most of these stocks actively. Hence, more volatility as compared to large-cap stocks due to limited liquidity. Also, you can choose to buy stocks gradually over a period of time, than putting all your money at one go.


1. Views, as are mentioned in the article, are personal views of Author and nothing to link with Co., its Director and Employees.

2. All investments are subject to market risk and you need to consult your financial advisor/consultant before investment.

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