Stock market vs mutual funds: How many stocks one should have in equity portfolio — explained

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Stock market vs mutual funds: In the name of diversification, a stock market investor end up adding huge number of stocks in one's equity portfolio, which more look like a mini mutual fund instead of a stock portfolio. So, it is very important for an investor to keep limited number of stocks in one's portfolio and gain subastantially with rise in price of portfolio stocks. According to investment experts, one should have fair allocation of amount against each stocks while making one's stock portfolio.

This helps an investor's absolute investment to grow at a rapid speed. One should create stock portfolio allocating at least ₹50,000 to each stock in a stock portfolio with an absolute value of ₹5 lakh, they said. However, with the passe of time, one can increase fund allocation against each stock or add some more stocks in portfolio because good number of public issues are getting listed these days.

Also Read: Buy or sell: Sumeet Bagadia recommends three stocks to buy next week Speaking on how to make one's stock portfolio, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "While creating one's stock portfolio, one has to keep in mind that purpose of this exercise is to generate alpha return against equity mutual funds. So, while allocating funds to one's stock portfolio, one needs to remain vigilant about this investment goal and choose stocks accordingly. One should keep fair amount against each stock so that it give compounding benefit on one's return over the time.