How many funds should I hold? | Fidelity UK (2024)

Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

THE whole point of a pick and mix is to get a variety of sweets. Whether you’re into cola bottles, peach rings or fizzy cherries, there’s no limit to many how you can choose. When it comes to your portfolio, it’s a little different.

Whether you’re an ISA or SIPP investor, or even both, chances are you hold a lot of your investments in funds. There are plenty of reasons why this is a sensible approach. But when you look at your portfolio, there may be some room for improvement.

When you invest in a fund, a fund manager will invest in whatever is appropriate according to the aims of the fund, so you can easily see where the fund can or cannot invest. Typically, fund houses will have a team of analysts to help guide these investment decisions. However, tracker funds, also known as index funds, work slightly differently. Rather than a team of analysts trying to choose stocks with the best potential, these funds are designed to mirror an index.

Each fund will tend to invest in a wide range of investments. When you hold a number of funds, the number of investments you hold can increase dramatically.

Sometimes, funds can overlap investments. For example, if you invest in 10 funds with a similar investment objective, you may find the holdings are similar and you’re not as diversified as you thought you were.

Depending on what kind of funds you hold in your portfolio, many funds will be the same ‘type’ - they may aim to meet similar objectives. For example, some funds may attempt to provide you with an income, while others may aim to increase your capital over a specific period.

One differentiator between funds is the sector they offer exposure to. For example, a global tracker fund may offer you exposure to a mixture of technology, financial and pharmaceutical stocks. Whereas a fund that targets the financial sector may only offer exposure to banks and fund managers.

A multi asset fund works in a slightly different way. This is a single fund that offers a spread of assets, including shares, bonds, and cash.

The type of funds you hold in your portfolio will depend on factors such as your investment goals and your risk appetite.

Ourprinciples for good investinghighlightthe importance ofdiversification. It’s impossible to know which asset class, country, continent, or industry sector will perform best or worst in any given year, so it may be better to hold a mix of investments - also known as a diversified portfolio.

Diversification matters because some investments will perform well at a time when others don’t do as well, so they may help to balance each other out. Please note, diversification may not be appropriate for every investor.

So, what’s the ideal number of funds?

Well, there is no right or wrong answer. It can depend on a number of factors includingthe number of funds you’re comfortable monitoring in your portfolio, your investment objectives and risk appetite. While it’s important to have a mix of styles and strategies to achieve diversification, that doesn’t mean you need a long, unwieldy list of funds.

As mentioned above, the amount of funds you hold is dependent on the funds you are comfortable monitoring in your portfolio. Some investors may prefer to hold several funds, for others, holding one fund may be easier to manage. There are anumber of toolson our website that can help you choose a fund.

If you’re an experienced investor, you might find ourInvestment Finderuseful as it allows you to filter and compare a wide range of funds.

You can also check out ourSelect 50which is a list of funds chosen by investment experts. It features active and passive funds, investment trusts and exchange-traded funds (ETFs).

And if you’re looking for some investing ideas,our Navigator toolcan provide you with a diversified fund, based on what's important to you.

Funds are either actively or passively managed. A passive fund simply attempts to match the performance of a stock market index, such as the UK’s FTSE All-Share, or the Dow Jones in the US. The allocation of investments in the fund is based on the investments that make up the index. There is less human decision-making than there is with an active fund, so typically, charges are lower.

An actively managed fund involves a manager who decides which investments your money should be channelled into. They will use their experience and skill to choose investments. The fund charges are likely to be higher than those on a passive fund to pay for the fund manager and the research and analysis they have access to. It also gives you the reassurance of knowing that your investments have been selected by investment experts.

Our Investment Director, Tom Stevenson chosefour fund picks for 2024, three of which are from our Select 50 list. Tom’s picks include a mix of actively and passively managed funds, covering asset classes such as bonds, cashand equities.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circ*mstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). Select 50 is not a personal recommendation to buy or sell a fund. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one ofFidelity’s advisers or an authorised financial adviser of your choice.

How many funds should I hold? | Fidelity UK (2024)


How many funds should I own? ›

You should therefore only keep as many funds in your portfolio as you're comfortable monitoring. For example, if you hold 10 or 20 different funds, you'll need to keep a close eye on the changing value of all these investments to make sure your asset allocation still matches your investment goals.

How much cash should I have in savings UK? ›

Anyone working should have a minimum of three to six months' worth of essential expenses in emergency savings. If you lose your job, it can take time to start earning an income again. Each person's experience of finding work is different, and it's harder to find employment in some industries or roles.

How many funds make an ideal portfolio? ›

Unless you are very well versed with the markets and have expert knowledge about mutual funds, a good rule of thumb would be to own: Large Cap Mutual Funds: Up to 2. Maybe 3 at best. Beyond that, it doesn't make sense as there will be a great overlap in the shares owned by your mutual funds.

How many funds should I have in my IRA? ›

How Many Mutual Funds You Should Hold. There's no magic number of funds to keep in a 401(k) or another portfolio for long-term investing. The right number of investments is one that ensures diversification but also factors in your investment approach. If you prefer low-effort investing, consider buying a single fund.

What is the 3 fund rule? ›

A three-fund portfolio is based on the fundamental asset classes, stocks and bonds. It is assumed that cash is not counted within the investment portfolio, so it is not included. On the other hand, it is assumed that every investor should hold both domestic and international stocks.

What is the 70 rule investing? ›

The Rule of 70 is a calculation that determines how many years it takes for an investment to double in value based on a constant rate of return. Investors use this metric to evaluate various investments, including mutual fund returns and the growth rate for a retirement portfolio.

How much does the average Brit have in savings? ›

As of January 2024, a survey from Finder has revealed that the average UK adult has £11,185 in savings. Despite this about 46% of people have £1000 or less in savings and 25% have £200 or less.

Can I retire at 50 with 300k? ›

Can You Retire at 50 With $300k? It may be possible if you have low expenses and income from other sources. Assuming a 4% withdrawal rate, the funds might generate $12,000 of annual income. That's probably not enough for most people, and you typically don't get Social Security until your 60s.

How much should a 50 year old have in savings UK? ›

How much savings should you have at 50 and 60? In the UK, the average savings by age 50 should be £198,390 or the equivalent of six times your pre-retirement income. By age 60, the average savings should be £270,100 or the equivalent of eight times your pre-retirement income.

Is a 3 fund portfolio good? ›

The three-fund portfolio is lazy investing at its best. It's simple, it's proven to have a better long-term track record of gains than picking single stocks and trying to time the market, and it lets you generally "set it and forget it" when it comes to saving for retirement.

Is the 3 fund portfolio good enough? ›

The three-fund portfolio is a sound investing approach, and you can't go wrong with it. If you set up asset allocation appropriate for your age, a three-fund portfolio will most likely perform well. I say "most likely" because nothing is guaranteed with investing, but this strategy is one of the safer options.

How many funds is too many in a portfolio? ›

Financial planners say it is difficult to put a cap on the number of schemes in an investor's portfolio, as investors increasingly use mutual funds to meet both long-term and short-term goals. However, they feel investors should restrict themselves to 10 schemes, as a higher number is difficult to monitor and manage.

Is 6000 a year in IRA enough? ›

Maxing Out an IRA

Finally, we'll assume a 5% after-inflation return on our investments. If we max out an IRA at $6,000 a year from age 25 to 70 based on these assumptions, we retire with just over $1 million. Keep in mind this is assuming an after-inflation return of 5%. That is an important assumption.

How to retire at 62 with little money? ›

6 Ways To Retire With No Savings
  1. Make Every Dollar Count — and Count Every Dollar. ...
  2. Pick Your Next Location With Savings in Mind. ...
  3. Or, Stay Where You Are and Trade Your Equity for Income. ...
  4. Get the Most Out of Healthcare Savings Programs. ...
  5. Delay Retirement — and Social Security.
Feb 6, 2024

What is the ideal asset allocation by age? ›

The common rule of asset allocation by age is that you should hold a percentage of stocks that is equal to 100 minus your age. So if you're 40, you should hold 60% of your portfolio in stocks. Since life expectancy is growing, changing that rule to 110 minus your age or 120 minus your age may be more appropriate.

How many funds should I invest in as a beginner? ›

There isn't a strict rule, but between five and 10 funds is usually a good idea. That lets you allocate money to different types of funds and markets without doubling up too much. It's also a manageable number to monitor and won't cost you too much in trading fees. But, size does matter.

Is it good to invest in multiple funds? ›

The Downside of Diversification

While mutual funds are popular and attractive investments because they provide exposure to a number of stocks in a single investment vehicle, too much of a good thing can be a bad idea. The addition of too many funds simply creates an expensive index fund.

What is the 1 3 rule of money? ›

The rule is that a third of your take-home income should be used towards your home, a third for living expenses, and the last third should be for savings and investments.

What is the rule of 72 money? ›

The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.

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