New Delhi, April 18 -- How many mutual funds do investors need for their financial plans and to what extent should they be diversified? While several new mutual funds and even new categories have been introduced over the years, investors really don't need more than eight-10 of them to attain their financial goals.

Depending on whether the goals are short, medium or long term, investments can be made in equity, debt or hybrid - a combination of equity and debt - funds.

Risk of over-diversification

Diversification is important, but doing so just for the sake of diversifying doesn't work and can backfire. That's because after a point, the benefits of diversification tend to peter out and dilute returns.

The risk of over-diversification o...