How many Investment Products should you have in your Portfolio?


In the fast-paced world of investing, the question of how many products one should have in their portfolio often arises. In bullish times, investors may chase the newest opportunities, while in bearish phases, they tend to stick to safer, more familiar options. But in today’s tech-driven landscape, the hunt for new investments has become more automated, with platforms pitching the latest trends directly to investors.

The allure of diversification and the belief that more products equal more returns can lead investors to add numerous options to their portfolios. From mutual funds to private equity, investors are bombarded with promises of high returns and low costs, often following the advice of social media influencers or online platforms.

However, in rising markets, almost every strategy seems to pay off, masking the need for a coherent investment plan. Investors even explore alternative investments like invoice discounting and angel investing, hoping to strike gold. But with more options available than ever before, the risk of overcomplicating portfolios has never been higher.

So, how many products should you really have in your investment arsenal, and what benefits do they offer? The answer lies in understanding the fundamentals of asset allocation.

Yes, back to the basics of Asset Allocation and understanding how different Asset Classes work. This is a very important concept which if followed well will never let you clutter your investment portfolio. 

There are only 4 Investment Asset Classes:

Equity , Debt, Commodities (Gold, Silver), and Real estate.

All these Asset Classes are well known, and every product that you invest in has only these 4 assets as their base. 

Equity Investment means Investing in Businesses, the current value and future potential of which is getting discovered through their shares in the Stock Market. When you do not know how to select the good stocks, you take help of fund managers and invest in Mutual funds or Portfolio Management Services. Sometimes you just need 5-6 funds or 1-2 PMS.

But then the product manufacturers come up with “New, Unique, different” strategies and structure. You also get sold to the “Past returns” and buy any product based on past numbers without realizing that in the longer term everything will get averaged out. And nowadays you get sold to the “Cost” also. And add more in the name of “Low cost”.

Know More: What is equity? Its much more than just stock market investment

Debt investments are the loans given to different Corporations, Governments or even Banks/NBFCs. The Borrower pays you a fixed interest. Depending on the Credit rating (credibility) of the corporations the Interest rates vary. Low rated papers pay high interest as the presumed risk of default is high. High rated securities pay less interest. 

Here again, you will find many products giving you debt exposure like Endowment Insurance Policies (Even ULIPs with debt allocation), Debt Mutual funds, Structured debt products, NBFC FDs, NCDs, Government securities, Small saving schemes (PPF, Sukanya, Senior citizen deposits etc.), RBI bonds, even the EPF/VPF…in the list. 

You may now calculate and understand where you are standing in terms of fixed interest allocation. High Debt Investments will lead to more safety low growth 

Know more: Type of Debt Funds – Know well to select good

Gold investments can be done in electronic as well as physical form. Physical gold generally is bought for consumption (wearing) purposes, and you very well know that no one sells the Jewellery of the house. In fact no one watches the gold prices either in the case of physical gold. Only gold in electronic/financial form gets visibility as Investment asset. 

But, if you are habitual to buy/consume physical gold, you are leaving a lesser surplus to be invested in products like Gold ETFs, Gold Funds or Sovereign Gold Bonds.  However, If you have Physical and Electronic gold both, then do watch for your overall gold allocation in your net worth.

Real Estate also comes in different variants (commercial, Residential and even land). You may take exposure into real estate through physical and financial routes like REITs, and AIFs. Nowadays, you may even buy Fractional Real estate.

This is an asset I have seen many people crazy about. And those who are into it, want more of it , just because this gives a sense of pride, that they have multiple properties in their name. 

Know about: Why real estate investment is riskier than equity

How to manage the allocation?

You must have gotten an idea on how different products get you to the same Asset class and at the end you are exposed or over exposed to products rather than Investment Assets. And sometimes Overallocated even in the Assets through the products which claim different strategies.

The Correct Asset Allocation should be guided by the Risk profile and Goals targeted. And the limit on the number of products should be put by you. I will tell you how.

When you are in Equity Investing…always remember that no strategy is so unique that it can’t be copied. Once it is successful, you will find that many other new products also come up with the same strategy. And when many products follow that strategy, it loses all the “newness” and “uniqueness” it has claimed in the beginning. At the end all strategies give the same average return. 

Same way, no single style like Value, growth, Momentum, Quality etc. on which you bought an investment always play out in all kinds of markets.  

All Equity products, be it Mutual funds or PMS or ULIPs etc. are compared with their respective benchmarks when it comes to Returns. You need not to have all structures, styles, strategies in the portfolio. Or have all, but stick to whatever you have bought for long, to pass through all the different market cycles. 

At the end, all will be giving the same average return. Whenever you want to invest more, keep adding in the same portfolio, rather than looking for “new” options.

Same works with Debt Investment. Do not just keep buying new FDs, Bonds or NCDs, every time you want to invest. Better to have a mix of Tax free Investments like EPF and PPF, plus 1-2 debt Mutual funds to manage the additional investments. Debt funds adapt themselves according to the market interest rates. Be wary of credit risk and also that extra return which is attracting you towards it. 

Do add gold with 5-10% of allocation and this may require you to reduce your buying of physical gold. But if you can not, then do not overdo gold.

In the case of Real estate, even if you have the potential to buy multiple properties, understand the challenges of liquidity, taxation, opaqueness etc. comes along with. 

Do not buy it for Rental (passive) income, as SWP in Mutual funds , and even Interest payouts in some fixed income schemes has better potential to generate Regular Income for you. Have your own house and at the most one Commercial one. Think from your family side…if they could manage the properties easily in your absence.


Wherever you invest,  you will end up in four asset classes only. Every asset class has its own risk and return profile. Now you just have to see how much of what is required in your portfolio. 

Ultimately, the goal is to keep your investment portfolio straightforward, understandable, and aligned with your financial objectives. Diversification is essential, but it should not come at the cost of complexity. By focusing on quality over quantity and adhering to sound asset allocation principles, investors can navigate the ever-changing landscape of investing with confidence.


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