Am I already diversified enough if I own several different stock funds?

Not necessarily, owning many funds can create an illusion of diversification while you hold the same underlying companies over and over. An S&P 500 fund, a large-cap growth fund, and a 'blue chip' fund may all be stuffed with the same handful of giant tech names, so a stumble in that sector hits all three at once. This is called fund overlap.

True diversification means owning things that behave differently: U.S. and international stocks, large and small companies, and bonds alongside equities. You can check overlap by comparing each fund's top-10 holdings, or using a free X-ray tool from Morningstar. Often a single total U.S. market fund plus a total international fund and a bond fund is more diversified than a shelf of six overlapping funds. More funds is not the same as more diversification.