The most common and vexing question that comes with investing in the stock market is how many stocks one should buy. Stock market investing can be very engrossing. There are a couple of factors to consider: whether you are a first-time investor willing to stake your hard-earned money or a veteran investor contemplating your stock market strategies.
Regardless of your level of expertise, the answer is not easy. The answer hinges on multiple factors: your market knowledge, financial goals, risk appetite, and capital. This guide aims to dissect the stock buying dilemma; in this case, the dilemma is how many stocks you should own and how much of each to buy in 2025.
1. What Does “How Many Stocks Should I Buy” Mean?
This problem can have two different interpretations.
- How Many Different Companies (Stock tickers) Should I Invest In? This refers to diversification, where you minimise risk by spreading your capital across numerous companies.
- How Many Shares Of A Particular Stock Should I Buy? Winner Take It All. This focuses on allocation, where, within each stock, you decide how many shares to buy based on your budget and the stock’s price.
Both are important. Let’s first start with the first.
How Many Different Stocks Should I Own?
How many stocks you should hold in a portfolio is a function of your investment knowledge, evaluation, and level of interest concerning engaging with the assets.
a) The Case for Diversification
Diversification safeguards your portfolio’s loss when one or two stocks perform terribly. Others can help stabilise the loss.
- Beginners: Target 5 to 10 stocks that you have researched. That way, you’ll have enough diversity to reduce your risk while keeping your portfolio easy to manage.
- Intermediate investors: Having 15 to 20 stocks enables you to have exposure to different sectors and sizes of companies, which helps in balance between stability and growth.
- Experienced investors: Some experienced investors manage 25-30 stocks or more. This is especially true for active traders or those who invest based on sectors and cycles. The more stocks you hold, however, the harder it becomes to track performance and stay up to date.
b) Diversify Smartly
Don’t just purchase different stocks for the sake of it. Diversify across:
- Sectors: IT, Banking, Pharmaceuticals, FMCG, Energy, etc.
- Market Caps: A mix of large-cap (stable), mid-cap (growing), and small-cap (high risk, high reward).
- Geographies (if applicable).
Experts suggest large caps and select mid-caps in 2025 because of the economic volatility and small caps with stretched valuations.
3. How Much Money Should You Spend on a Specific Stock?
After you decide on the companies you want to invest in, the next step is to allocate how much money to invest in each stock.
a) Figure Out Your Total Expenditure
To begin with, think about how much capital you’re willing to set aside for a given stock. For some, it may be a single amount like ₹1,00,000, while some choose to do SIPs every month.
Next, allocate budgets to your number of stocks. For instance, if you have a budget of Rs 1,00,000 and ten stocks, you can spend Rs 10,000 on each stock.
b) Find Out the Latest Market Price
Check the possible share prices on NSE India, BSE India, or simply through your trading application. Ensure that the price shown is the current price, and it is not outdated data.
c) Perform the Calculations
You may freely apply this equation:
For NSE/BSE Equities: Number of Shares = Amount to Invest ÷ Price of Share
As an illustration, if you set aside ₹10,000 on a stock that trades at ₹500, your purchases would total as follows:
₹10,000 ÷ ₹500 = 20 shares
In the event that your broker does not support fractional shares (which most brokers in India do not), it is suggested to drop to the lower value.
d) Don’t Brush Off Expenses
While most online brokers in 2025 provide zero-commission trading, keep in mind:
- STT (Securities Transaction Tax)
- GST on brokerage services
- Charge for the exchange transaction
- SEBI turnover fees
While usually minor, these expenses can accumulate quickly if you’re trading often.
4. How Much of One Stock is Too Much?
Try not to exceed 10-15% of your total portfolio on a single stock, and even less if it’s a mid or small-cap company. Large caps are generally more stable, but even they shouldn’t exceed 20% without strong conviction and research backing you.
The higher concentration leads to greater risk exposure from a single company, a regulatory issue, an earnings miss, or some management blunder can result in considerable losses.
5. How Does Risk Appetite Affect the Number of Stocks You Should Own?
Your risk appetite dictates how many stocks you can buy and to what ratio.
Conservative Investor
It is best to focus on 5-10 stocks and stick with large caps. Stay away from burning small-cap stocks or unlisted shares. Spread out across defensive sectors such as FMCG, pharma, and banking.
Balanced Investor
15-20 stocks should be held. Include a healthy mix of large-cap (50 per cent), mid-cap (30 per cent), and small-cap (20 per cent) stocks. This provides a balanced potential for growth while maintaining stability.
Seasoned Investor
This strategy involves investing in more than 20 stocks while allocating a greater percentage to mid-caps and small-caps. Investments should also include emerging sectors of green energy, EVs, and fintech, along with some unlisted shares. Remember to keep an eye out; higher returns require greater risks.
6. Take a Look at Unlisted Shares and IPOs: Is It Worth It?
By the year 2025, the unlisted market will be much easier to access in India. Retail investors are now able to purchase shares in promising companies.
However, some downsides include:
- Very little liquidity.
- Price discovery is less clear.
- Requires a long-term hold to realise the potential value.
If you’re willing to take on risks, then incorporating 5-10% of your portfolio into unlisted shares or IPOs could be a good move, especially with a longer time frame in mind.
To learn more about unlisted shares, read:
What is a Listed and Unlisted Company?
7. How Often Should You Check Your Stock Holdings?
The amount of stocks you own today may not be ideal a year from now.
To reassess your portfolio, follow these guidelines:
- Quarterly: Earnings reports and major news.
- Annually: Performance, valuation, and other personal goals for rearranging.
- Right Away: If any stocks permanently lose a significant part of their value, get a downgrade, or face disruption in the industry.
Many investors get stuck trying to sell “dead stocks” simply because they bought them at one point in time. Do not be afraid to cut losses and shift funds to better opportunities.
Conclusion
The number of stocks to buy can highly vary person to person, and is catered based on one’s financial aspirations, level of experience, capital, and risk appetite. But to help you get started in 2025, here’s a rough guideline:
- 5-10 stocks for beginners
- 15-20 stocks for balanced investors
- 20+ stocks for seasoned investors
Spend your capital smart. Do not overexpose yourself, and avoid trying to buy an excess amount of stocks for the sake of having more. As the saying goes, “quality over quantity” multiple studies have shown that narrow, focused portfolios outperform the over-diversified ones nearly every time.
Get in Touch with us
For any query/ personal assistance feel free to reach out at support@Altiusinvestech.com or call us at +91-8240614850.
Learn more about Unlisted Company.
You can also checkout the list of Best 5 Unlisted Shares to Buy in India
Learn more about How to apply for an IPO?