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The Plenti Group (ASX: PLT) share price has been a positive performer on Friday morning.

At the time of writing the technology-led consumer lending and investment company’s shares are up over 3% to $1.23.

Why is the Plenti share price pushing higher?

Investors have been buying Plenti’s shares following the release of an update on its performance during the second quarter of FY 2021.

According to the release, Plenti achieved record loan originations of $106.9 million during the second quarter. This was a 48% increase compared to the prior corresponding period and 11% above its prospectus forecast.

This also marked the first quarter of loan originations exceeding $100 million and was underpinned by three consecutive record months.

At the end of the quarter, Plenti’s total loan portfolio increased to approximately $434 million. This was also ahead of its prospectus forecast of $426 million.

Another big positive was that the company’s loan portfolio continues to demonstrate strong credit performance. Management notes that it has low credit losses, with a reduction in both 90+ day arrears and number of borrowers in loan deferral.

“An outstanding result.”

Plenti’s Chief Executive Officer, Daniel Foggo, appeared to be delighted with its performance during the second quarter.

He said: “Delivering three consecutive months of record loan originations and exceeding our prospectus forecast is an outstanding result for Plenti. With this momentum, our focus remains on the development of market-leading and innovative products and building scale in each of our large lending markets.”

“Plenti was founded on a belief that by building a lending business with technology at its core we could offer customers better value and service than traditional lenders and build a business of serious scale. We are delivering on that promise and our growth is testament to that central focus on technology and our customer,” he added.

Plenti will release its first half results for FY 2021 in mid-November.

More reading

• Here’s why the Plenti (ASX:PLT) share price zoomed 13% higher today
• Plenti (ASX:PLT) share price crashes lower after its IPO
• New $280 million ASX tech share listing Wednesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The PainChek Ltd (ASX: PCK) share price is dropping lower on Friday morning following the release of an announcement.

In morning trade the healthcare technology company’s shares are down 3% to 9.2 cents.

What did PainChek announce?

Investors have been selling PainChek’s shares despite it announcing a partnership with Ramsay Health Care Limited (ASX: RHC) and Edith Cowan University (ECU) for a research project.

According to the release, the research project will investigate ways of minimising or stopping the progression of frailty in hospital patients. It is expected that better pain management is key to achieving these outcomes.

This bodes well for PainChek, given that it has developed a smartphone-based pain assessment and monitoring application.

Management notes that this project marks the first commercial agreement with a hospital organisation entered into by PainChek.

And while the revenue associated with the project is not material, it feels it provides significant validation for its technology. It also allows the company to form a partnership with one of Australia’s leading hospital and health service providers.

“An important step.”

PainChek’s CEO, Philip Daffas, was very pleased with the partnership and sees it as an important step for the company.

He commented: “Bringing PainChek into the local and global hospital market has been a longstanding goal of the company, and this marks an important step toward that goal. We expect that a successful outcome from this research will provide for excellent opportunities with groups such as Ramsay and provides us a high-quality case study we can demonstrate with other potential customers.”

What is the project?

This project will examine how a nurse led volunteer program and better pain management could help improve outcomes for hospital patients who are frail.

The company notes that the evidence to support the association between pain and frailty continues to grow. Pain prevalence increases with increased age and so too does frailty.

As persistent pain can lead to functional disability, depression, or social isolation, it has been suggested that the burden of pain leaves older adults less capable to compensate. This increases the likelihood of frailty.

A consortium of 12 researchers from five Australian universities is investigating different ways of minimising or stopping the progression of frailty in hospital patients. This is through volunteer support interventions and optimal pain management facilitated by better pain assessment through the use of PainChek.

More reading

• 3 ASX dividend shares to buy for income today
• 3 of the best ASX healthcare shares to buy and hold
• 2 must buy ASX 200 shares to snap up right now
• Buy and hold these ASX shares to grow your wealth
• The best ASX stocks to buy for the COVID-19 recovery play

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX renewable shares could be in high demand very soon. According to an article in the Australian Financial Review, demand for clean energy is surging while coal prices have fallen to a new record low.

That appears to be at odds with what we’ve seen in ASX coal shares this week. The Whitehaven Coal Ltd (ASX: WHC) share price has seesawed in recent days but is up 14.7% in the last 5 days.

ASX renewable shares like Tilt Renewables Ltd (ASX: TLT) have also been climbing in recent days. The Kiwi wind and solar company’s value has edged 3.7% higher this year to outpace the S&P/ASX 200 Index (ASX: XJO).

So, which ASX shares will win the battle between renewable energy and coal in 2020 and beyond?

Why ASX renewable shares could be worth buying

New data from the Open National Electricity Market project shows that demand for coal-fired power generation is falling. That’s driven by solar farm generation and rooftop solar in places like Queensland.

In the short term, that could hit profits for coal miners like Whitehaven. However, the longer-term outlook could also be characterised by less investment in coal mining going forward.

The future does appear to be brighter for ASX renewables shares. If demand continues to rise and investment in the sector increases, that is good news for capturing further profits.

There will inevitably be more competition as the market matures. However, a company like Tilt, or major shareholder Infratil Ltd (ASX: IFT), could have a significant first-mover advantage.

Add to that a growing interest in environmental, social and governance (ESG) investing, and ASX renewable shares could be worth a look.

ESG investing can be hit and miss, but it’s hard to believe the Aussie super funds won’t want to increasingly invest in renewables. That means a $2.9 trillion pot of money could be looking for more shares to invest in for clean energy exposure.

Foolish takeaway

There is still a good investment case for coal shares like Whitehaven. For one thing, they do pay out significant dividends compared to many of their ASX 200 peers.

However, the long-term future of renewables is starting to take shape. That could mean ASX renewable shares are back in the buy zone in 2020.

More reading

• These were the best performing ASX 200 shares in September
• 3 ASX renewable energy shares to buy for 2021
• ASX 200 ends the day flat, BOQ (ASX:BOQ) shares drop on impairments
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• These were the best performing ASX 200 shares last week

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Altium Limited (ASX: ALU) share price slumped 1.9% lower in yesterday’s trade to $35.23 per share. That could mean there is an opportunity to buy the ASX tech share for a good price as others look to sell.

Why the Altium share price is falling

It was a sharp fall in the value of the Altium share price yesterday given no new announcements from the electronic printed circuit board (PCB) software design company. 

Altium is an Australian-American company and I think it could have been a reaction to the United States presidential debate.

Altium generates a significant portion of its earnings in America and is therefore exposed to political risk factors over there.

There’s also the looming decision by the Reserve Bank of Australia regarding interest rates. A lower official cash rate could push the AUD-USD exchange rate lower and have implications for company earnings.

It’s not all doom and gloom right now though. The Altium share price is still up 2.6% for the year despite slumping in recent days.

Is the ASX tech share in the buy zone?

I think there will be more volatility ahead. The US presidential election could continue to worry investors right through until the end of the year.

The Altium share price currently trades at a price-to-earnings (P/E) ratio of 105.7. That’s quite high in normal times, but we’re seeing ASX tech shares trade for much higher multiples.

Many, like fellow WAAAX member Afterpay Ltd (ASX: APT), are yet to even turn a profit. On top of that, Altium shares are yielding 1.1% in dividends right now.

I do think Altium is heavily exposed to potential changes in the US given its core business operations. That includes amendments to various laws covering labour, taxes and trade.

However, Altium did surprise investors with its full-year results. Despite disruptions in FY20, the software design company posted 10% revenue growth to US$189 million. Net profit slumped 42% to US$30.9 million but pre-tax profit climbed 12% to US$64.6 million.

Foolish takeaway

I’d be wary of betting against the Altium share price in 2020. Volatility can be scary but it can also present buying opportunities for brave investors.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why the Afterpay (ASX:APT) share price has further to run
• Where to invest your CBA dividends
• 2 must-buy ASX 200 shares I rate highly
• Leading brokers name 3 ASX shares to sell today

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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BrainChip Holdings Ltd (ASX: BRN) saw its share price jump by 12.5% on Thursday, and it has risen by 620% in year-to-date trading. Despite this, I think this is the best share to buy on the ASX right now. It is an artificial intelligence company with existing products in security applications globally. Although all the company’s revenue is from security industries such as; casino play management, subways and international airports, it is still very much in start up mode.

Why is this the best share to buy?

The company is pioneering a first-of-a-kind neuromorphic chip called Akida, designed to replicate the human brain and sensory system. At this stage, it has been built and is in the early stages of prototype collaborations with carefully selected partners. These include United States-based Vorago Technologies for a Phase 1 NASA project, MagikEye Inc., and two auto manufacturers. The applications are very broad and the company is pushing us towards a future where many things suddenly become possible. 

The Akida chip has many applications throughout defence, with the initial focus on space and drone technology due to its many physical advantages. For instance, it has low energy requirements, is lightweight, and has the ability to take the place of multiple processors and components. 

Another reason I think BrainChip is currently the best share to buy is the highly diverse field of applications its product spans. These include autonomous vehicles, smart home applications, and speech and gesture recognition for gaming. 

BrainChip CEO, Louis DiNardo, recently said:

You don’t need a lot of market share to build a big company, so we’re being somewhat selective about our target markets and applications. And fortunately for us, after a lot of hard work, we now have chips in hand. It’s not just about PowerPoint presentations .. we’ve actually got chips.

The company expects to see Akida commercialisation start from early CY21 with customers licensing its intellectual property. This is expected to be followed by full-scale chip manufacturing towards the end of CY21. 

Foolish takeaway

BrainChip is in the late stages of product development and is, I believe, leading the world in this technology. Although not currently profitable, the company’s addressable market is massive. Moreover, as the capabilities of this technology become more widely known, its addressable market will expand further.

The BrainChip share price has risen and fallen dramatically over the past month. So even with a 12.5% pop in the share price yesterday, I still believe it remains the best share to buy on the ASX at the moment. It is a very rare opportunity for investors to buy into an ASX listed semiconductor company in its early stages. 

More reading

• Why a2 Milk, BrainChip, Oil Search, & Starpharma shares are dropping lower
• The BrainChip (ASX:BRN) share price is down 65% in just three weeks
• Forget day trading and buy and hold these fantastic ASX shares
• BrainChip (ASX:BRN) and Novonix (NVX) were among the most traded shares on the ASX last week
• Has the BrainChip (ASX:BRN) share price weakness created a buying opportunity?

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking to add a few new ASX shares to your portfolio, then the three listed below could be worth considering.

I believe they could be among the best shares on the ASX and destined to be strong performers over the next few years.

Here’s why I would invest $10,000 into them right now:

Appen Ltd (ASX: APX)

Appen and its large team of crowd sourced workers provide or improve the data that is used for the development of machine learning and artificial intelligence products. Given how important these products are becoming for businesses and governments, you won’t be surprised to learn that demand for Appen’s services has been growing rapidly in recent years. I’m confident this demand will remain strong for a long time to come and underpin robust earnings growth over the next decade.

Pushpay Holdings Ltd (ASX: PPH)

Another ASX share to invest $10,000 into is this donor management and community engagement provider. Over the last few years, the number of churches using Pushpay’s platform has been increasing at a very strong rate. In FY 2020, for example, Pushpay reported a 42% increase in customer numbers to 10,896. Unsurprisingly, this customer growth is underpinning very strong sales and earnings growth. Pleasingly, demand continues to grow and further explosive growth is expected in FY 2021. Management expects its earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of US$50 million to US$54 million this year. This is higher than its previous guidance and more than double FY 2020’s earnings.

Xero Limited (ASX: XRO)

A third ASX share to buy is Xero. It is a cloud accounting and business software company which has also been a very strong performer over the last few years. This positive form continued in FY 2020 when Xero delivered impressive top line growth of 30% year on year. Another big positive was its operating leverage, which led to increasing margins and a 52% increase in EBITDA to NZ$139.2 million. I’m confident Xero still has a long runway for growth thanks to its massive global market opportunity and its high quality and sticky product.

More reading

• 5 things to watch on the ASX 200 on Friday
• 2 top ASX shares I’d buy with $2,000 for October and beyond
• 3 ASX shares for growth, income, and value investors to buy in October
• Why I would buy Xero (ASX:XRO) and this ASX tech share
• One ASX tech share to buy today ahead of government cash splash

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think there are some ASX shares that are great options to buy for rock solid retirement income.

As we’ve seen this year and over the past few years, businesses like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Telstra Corporation Ltd (ASX: TLS) and Transurban Group (ASX: TCL) have cut their dividends to shareholders.

There are less popular names that have been much more reliable for dividend income. Here are two ASX share ideas for rock solid income:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is one of the best ASX dividend shares in my opinion. It certainly doesn’t offer the biggest yield, but in terms of reliability I think it’s the clear leader.

It has grown its dividend every year for the past two decades, including through COVID-19. That’s the most reliable growth record on the ASX.

One of the main reasons why it has done so well is its diversification. It owns a variety of different businesses and assets in its portfolio such as TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT).

Soul Patts funds its dividend purely from the cashflow (dividends and distributions) from its investments, after paying for its expenses. In FY20 it only paid out 57% of its net cashflow as dividends to shareholders. That means 43% of the cashflow can be invested into other opportunities to increase FY21’s cashflow.

Not only can Soul Patts grow its dividend from its re-invested capital, but its underlying holdings of ASX shares will also hopefully grow their dividends.

Holdings like Clover Corporation Limited (ASX: CLV), Magellan Financial Group Ltd (ASX: MFG) and Wesfarmers Ltd (ASX: WES) are attractive long-term dividend growth ideas.

I also like that Soul Patts is trying to generate growing profit from good unlisted investments like agriculture, swimming schools, resources and Ampcontrol.

At the Soul Patts share price it offers a grossed-up dividend yield of 3.6%.

Australian United Investment Company Ltd (ASX: AUI)

Australian United Investment (AUI) is a listed investment company (LIC). It was founded in 1953 by the late Sir Ian Potter, and The Ian Potter Foundation Ltd is today the company’s largest single shareholder.

It invests in many of Australia’s biggest ASX shares including CSL Limited (ASX: CSL), Commonwealth Bank of Australia (ASX: CBA), Transurban, Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP). But it also has larger weightings to some ASX shares like Diversified United Investment Limited (ASX: DUI), Atlas Arteria Group (ASX: ALX) and Soul Patts which aren’t among the biggest 20 shares on the ASX.

Its operating expenses were just 0.12% of the average market value of the portfolio over FY20, which is extremely cheap. The lower the expense ratio of a portfolio investment (like a LIC), the more of the net returns that are left in the hands of shareholders.

AUI has grown or maintained its dividend every year over the past 30 years. That’s a very strong record. Very few businesses can point to that level of strength of their dividend payments. Future dividends are not guaranteed to be reliable, but I think it’s a good indicator of how AUI likes to operate with regards to dividends.

At the current AUI share price it offers a grossed-up dividend yield of 6.5%. It’s trading at a 6% discount to the AUI pre-tax net tangible assets (NTA) per share at 31 August 2020.

Foolish takeaway

Both of these ASX dividend shares have been very reliable over the past two decades. Out of the two I’d prefer to buy Soul Patts because of its higher focus on growth and its wider investment mandate. However, AUI is one of my preferred ways to invest in ASX blue chips.

More reading

• 3 strong and reliable ASX dividend shares for October
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• 3 ASX shares for a stress-free life
• How to create a yearly income of $65,000 in dividends
• These were the best performing ASX 200 shares last week

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited and CSL Ltd. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Transurban Group and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you looking for dividend shares to buy in October? Then I think the two listed below could be worth considering.

Here’s why I think these ASX shares would be great options for income investors:

Jumbo Interactive (ASX: JIN)

Jumbo Interactive is an online lottery ticket seller and the operator of the Oz Lotteries website. It also has a growing software as a service (SaaS) business, Powered by Jumbo. This business provides lotteries with everything they need to take their gaming online.

Earlier this year management estimated that just 7% of the US$303 billion global total addressable market was currently online. Given how much more efficient it is to sell lottery tickets online instead of in physical locations, I suspect that more and more lotteries will make the shift over the next decade. And given the quality of its Powered by Jumbo platform, I believe Jumbo is well-placed to win market share. This should support solid earnings and dividend growth over the 2020s. For now, based on the current Jumbo share price, I estimate that it offers investors a fully franked 3.3% FY 2021 dividend yield.

People Infrastructure Ltd (ASX: PPE)

I think this leading workforce management company is another ASX dividend share to buy. Demand for People Infrastructure’s innovative solutions to workforce challenges has been growing strongly in recent years. This certainly was the case in FY 2020, with the company delivering an impressive 34.5% increase in revenue to $374.2 million and an even more impressive 53.3% lift in normalised net profit after tax and before amortisation (NPATA) to $18.4 million.

Although the pandemic is likely to stifle its growth in FY 2021, I believe its long term outlook is as positive as ever and expect very strong earnings and dividend growth over the 2020s. At present, I estimate that it will pay a 9.5 cents per share fully franked dividend in FY 2021. Based on the current People Infrastructure share price, this gives investors an attractive 3.1% forward dividend yield.

More reading

• Brokers name 3 ASX shares to buy right now
• Why EOS, Jumbo, Nearmap, & OceanaGold shares are dropping lower today
• ASX 200 sinks 2%, Corporate Travel (ASX:CTD) soars 8%
• 2 exciting ASX mid cap ASX growth shares to buy for the long term
• Why the Jumbo (ASX:JIN) share price is moving higher today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended People Infrastructure Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Thursday the S&P/ASX 200 Index (ASX: XJO) returned to form and raced notably higher. The benchmark index climbed 1% to 5,872.9 points.

Will the market be able to build on this on Friday? Here are five things to watch:

ASX 200 expected to fall.

It looks set to be a disappointing end to the week for the ASX 200 despite a solid night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 26 points or 0.45% lower this morning. Overnight the Dow Jones rose 0.1%, the S&P 500 climbed 0.5%, and the Nasdaq stormed 1.4% higher.

Oil prices sink lower

Energy shares such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could tumble lower on Friday after oil prices sank lower.  According to Bloomberg, the WTI crude oil price is down 3.9% to US$38.65 a barrel and the Brent crude oil price has dropped 3.5% to US$40.83 a barrel. A weak demand outlook and higher than expected OPEC production weighed on prices.

Gold price rises.

Gold miners such as Evolution Mining Ltd (ASX: EVN) Northern Star Resources Ltd (ASX: NST) could end the week on a positive note after the gold price pushed higher. According to CNBC, the spot gold price is up 0.8% to US$1,910.60 an ounce amid U.S. stimulus hopes.

Tech shares could storm higher.

It could be a good day for tech shares such as Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX) after their U.S. peers stormed higher overnight. On Wall Street the tech-focused Nasdaq index recorded a strong 1.4% gain. The local sector has a tendency to follow the lead of the Nasdaq.

Mesoblast on watch.

It will be worth keeping an eye on the Mesoblast limited (ASX: MSB) share price on Friday. While the company isn’t expecting to make an announcement on whether the US FDA has approved its remestemcel-L (RYONCIL) product for paediatric patients with steroid-refractory acute graft versus host disease until Monday, there’s always a chance the FDA will move quicker than expected and give its verdict before the market open. The Mesoblast share price will remain halted until its release.

More reading

• Why the Mesoblast (ASX:MSB) share price is in a trading halt
• ASX 200 rises 1%, Reliance Worldwide (ASX:RWC) climbs 11%
• ASX big bank profits haunted by zombie mortgages
• ASX 200 up 1.6%: CBA higher on COVID-19 loan deferrals update, Reliance rockets
• Investors push for 40% women in ASX 200 exec roles

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Ah, diversification… This has to be one of the most overused words in investing. You’ll hear almost every market commentator touting the benefits of diversification (including us Fools). We all know the dangers of being under-diversified, epitomised with that equally-overused phrase ‘don’t have all your eggs in one basket’. But is it possible to be too diversified?

What is ‘diversification’?

Diversification in its essence refers to spreading out your capital among different investments to mitigate risk. It is certainly a theory that has merit. One of the founders of modern portfolio theory (a prominent theory of how markets operate that we Fools often disagree with), Harry Markowitz, famously called diversification “the only free lunch in finance”. And to some extent that’s true. It is possible to ‘diversify’ a portfolio in a way that boosts your potential returns without increasing the risk of losing your money.

The idea is that by spreading out your capital, you reduce the chances of a single event, whether that be relating to an individual company or an entire market (e.g. Australia), from decimating your portfolio. Take an investor who has all of their wealth in Sydney property. Well, that investor is highly exposed to a disruption in that one single market. If that investor sold a house or two and invested the profits in ASX shares, their diversification would increase. This is an example of when diversification is probably a wise and prudent thing to do.

But what about a pure portfolio of ASX shares?

Di-worse-ification

Well, I think some investors do get a little carried away with diversification. We Fools like to advocate that all active investors get to a point where they have 15-20 different and uncorrelated ASX shares for diversification purposes. We also think that adding a few international shares is a good idea as well, just in case the entire Australian economy is hit with some kind of black swan event.

But you could take it a lot further. ASX shares are just one asset class of many. There are also government bonds, corporate bonds, precious metals, property, cryptocurrencies and cash to consider. There’s also a range of more eccentric investment options too, like collectables, fine wine, art.. .the list goes on.

And in the world of shares, there are also countless options. Every exchange-traded fund (ETF) provider on the market will tell you that buying their ETF is a good idea for diversification. Why stop at ASX and US shares? Why not get exposure to European shares with the iShares Europe ETF (ASX: IEU)? Or Asia with the Vanguard FTSE Asia ex-Japan Shares Index ETF (ASX: VAE)?. Or the ‘Far East’ with the iShares MSCI EAFE ETF (ASX: IVE)? You get the idea… Going down this path won’t lead to a good long-term outcome in my view.

Foolish takeaway

There are literally thousands of ETF combinations you could have in your portfolio, but there does come a point when you’re changing the oil in a rental car, so to speak. I don’t think you really gain much benefit from holding a portfolio of 20 diversified companies against a portfolio of 1,000 companies, or a collection of ETFs covering every corner of the investing world. If you choose to invest passively, just one market-wide ETF does give you quite a lot of diversification. And if you actively invest, I think you can get as much balance as you need with a portfolio of 15-20 shares (perhaps with some international ones thrown in for good measure). So don’t get too carried away with diversification, you might end up diversifying your profits if you do!

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• Where I’d invest $10,000 into ETFs right now

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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