How can individual investors obtain the benefits of diversification?

Question

Quizplus · Accepted Answer

Individual investors can obtain the benefits of diversification by building a portfolio of 25-50 assets. This can help reduce non-systematic risk (risk specific to a particular company or sector) and increase the chances of having positive returns. Holding the market portfolio (A) is not necessarily feasible or practical for individual investors, and finding two assets that are perfectly negatively correlated (B) is unlikely. Holding at least 1,000 different assets (C) may not be feasible for many individual investors due to the high costs and time commitment involved in managing such a large portfolio.

How Can Individual Investors Obtain the Benefits of Diversification