How many differnt shares should I hold?

Question

Should I include diversified assets in this number e.g. if I buy shares in a property company do I call that DE or real estate?

Answer 1

There isn't any right or wrong answer I guess....... after my first 2yrs of investing in shares via HALIFAX sharebuilder I think I hold shares in at least 50 different companies bought between £5 to £20 a pop las time I tried counting them...... some worked out (one hit 250% in profit today last time I looked), while others bummed out big time (over 80% loss).

This is my favourite article in on investing in shares:
http://www.fool.co.uk/school/2006/sch060130.htm
And further on, where it tells you about some of the world's greatest investors (e.g. Warren Buffett, Benjamin Graham, etc). Here's the page on Warren Buffett:
http://www.fool.co.uk/school/2005/sch050930.htm
And here's a quote from him on this:
"If you are a know-something investor, able to understand business economics and to find five to ten sensibly-priced companies that possess important long-term competitive advantages, conventional diversification makes no sense for you. It is apt simply to hurt your results and increase your risk. I cannot understand why an investor of that sort elects to put money into a business that is his 20th favourite rather than simply adding that money to his top choices - the businesses he understands best and that present the least risk, along with the greatest profit potential. In the words of the prophet Mae West: 'Too much of a good thing can be wonderful.' "

So, going by that (and personal experience) I'd say try sticking with shares in no more than 10 different companies & gradually build your holding in them over time.... perhaps 5 stable & established big name companies for getting good dividend payments (such as RBS.L, LLOY.L, HBOS.L, SVT.L, KEL.L)... the rest for trying to get good growth out of them (research them at http://quote.fool.co.uk and take your pick.... ADM.L + SNCL.L don't look too bad at the moment).

Answer 2

There's no 'right' answer - it all comes down to your own ability to select profitable Investments (or not :-) ) and how much money you have to invest (depending on your Stock Brokers minimum charge, it may not be worth investing in amounts of less than £500 to £1,000 per transaction).

Some people specialise in Growth shares, others in Income, yet others in Recovery shares - if you can only identify 10 or 15 'good prospects' then your portfolio will consist of these 10 or 15 shares.

NB. Markets are very volatile at the moment - so it could be a good chance to invest BUT whilst some think the recent drop is over and shares will now recover, a lot of people are expecting the Market to drop much further ... you just have to do your own research and make your own mind up ...