Article 7 of 10
Portfolio Strategy & Diversification
Just as a prudent stock investor doesn't put all their capital into a single company, experienced app investors build diversified portfolios of multiple applications across different accounts, categories, and risk profiles.
Just as a prudent stock investor doesn't put all their capital into a single company, experienced app investors build diversified portfolios of multiple applications across different accounts, categories, and risk profiles.
Why Diversification Matters
Individual apps carry idiosyncratic risks: Apple could remove the app, a competitor could erode market share, or a policy change could affect a specific category. By holding 5–10+ apps across different developer accounts and App Store categories, the portfolio absorbs individual shocks without catastrophic loss.
Portfolio Construction Principles
- Spread across accounts. Never concentrate all apps on a single developer account. If one account faces issues, the others remain unaffected.
- Category diversification. Mix utility apps, lifestyle apps, education apps, health and fitness apps. Different categories respond differently to market trends and policy changes.
- Revenue tier mix. Combine a few higher-MRR anchor apps with several smaller apps. The smaller ones carry higher individual variance but are cheap enough to absorb losses.
- Age diversification. Include both "blue chip" apps (3+ years, no marketing) and younger apps with slightly higher risk but lower acquisition cost.
Target Portfolio Economics
| Metric | Conservative Target | Optimistic Target |
|---|---|---|
| Number of apps | 10+ | 15–20 |
| Payback period (blended) | 24 months | 18 months |
| Monthly portfolio yield | ~4% of investment | ~5.5% of investment |
| Ongoing costs | ~10% of gross revenue | ~8% of gross revenue |
Frequently asked questions
Why should app investors build a portfolio instead of buying one app?
Diversification reduces single-app risk and smooths cash flow across categories, accounts, and maturity levels.
How many apps are typically targeted in a diversified strategy?
Many investors aim for 10+ apps, then expand as systems and capital allow.
What does a balanced portfolio mix look like?
A practical mix spreads exposure across categories, account entities, and revenue tiers rather than concentrating in one niche.