How many funds or holdings do I actually need to be diversified?

Far fewer than most people think. With broad index funds, three holdings — a total U.S. stock fund, a total international stock fund, and a total bond fund — already give you exposure to thousands of companies and bonds worldwide. Some investors use a single all-in-one target-date or balanced fund, which is one holding that's fully diversified. Adding a dozen overlapping funds usually doesn't improve diversification; it just creates redundancy, since many funds own the same large companies, and makes rebalancing harder. More holdings can even hide the fact that you're not truly diversified if they all track the same index. The goal is broad coverage at low cost, not a long list. If you can't explain why each fund is there and what unique exposure it adds, you probably have too many. Simpler portfolios are easier to maintain and just as effective.