As with most things in life, it is possible to have too much of a good thing. If you diversify too much, you could stunt your returns, increase transaction costs, and pay too much in taxes. Buying too many investments could also increase your concentration risk because some of the holdings may actually invest in the same stocks, bonds, or other investments. Additionally, by having so many investments to keep track of, you could overcomplicate your finances and get overwhelmed. When this happens, investors tend to become frustrated and either stop investing or ignore their portfolios.