Too many shares?

Q: Is it possible to have too many shares of one stock in a portfolio? — W.L., Worcester, Mass.

A: Pay little attention to the number of shares. What really matters is the total value of your stake in each company, and how it relates to your total portfolio value. There isn’t much difference between owning 1,000 shares of a $10 stock (total value: $10,000) or 200 shares of a $50 stock (total value: $10,000).

Don’t let any single stock grow to represent a large percentage of your portfolio, though, because it’s risky to be over-concentrated. If 25 percent of your portfolio is in the stock of a single company and that stock takes a dive, your portfolio will be hit hard. But it can also be counterproductive to have your money spread across too many companies: If you have only 1 percent of your portfolio in a stock that triples in value, it won’t make a huge overall difference. Focus your money on your best ideas. For many people, 10 to 20 stocks is a good number of holdings — enough for diversification, but not more than you can keep up with.

Q: I’m thinking that since I’m single, I don’t need life insurance. Right? —B.D., Warren, Ohio

A: Generally, true: The purpose of life insurance is to protect anyone who depends on you financially. The classic example is children, and it’s smart to carry term life insurance from their birth to when they can be financially independent. Your spouse or your parents may also depend on your income, as might a family business. If your funeral expenses can be paid for and no party would be financially hurt if your income disappears, you can probably do without life insurance.