Diversifying a portfolio is an excellent way for investors to achieve their long-term financial goals. Benefits arise because an outcome that hurts stocks in one industry could benefit stocks in another. For instance, a strike at an auto manufacturing plant could cause automakers’ stocks to drop and simultaneously cause prices of rideshare stocks to rise.
The balance allows the investor to spread the risk over several stocks and industries and increases the chances of picking a growing stock.
There is no hard rule on how many stocks an investor should own to create a diversified portfolio. Still, if you carefully pick stocks with low correlation, you can achieve a diversified portfolio with 15 to 20 companies in it. Here are five growth stocks in diverse industries to get your portfolio started.