Balanced Investment Strategy

  

A balanced investment strategy is a method of portfolio allocation that tries to mitigate risk while having a measure growth potential. Generally, the portfolio is comprised of fixed income securities and equities, usually 50% equities to 50% fixed income securities, although some portfolios may go more aggressive (60% equities/40% fixed income) or more conservative (40% equities/60% fixed income).

However, fixed income securities and equities don't move in the same direction. Think of a teeter-totter. When equities are up (the high side of the teeter-totter), fixed income securities are usually down (the low end of the teeter-totter) and vice versa. A good year for fixed income securities is usually a bad year for equities. A balanced portfolio is structured to use fixed income yield distributions to offset the smaller gains of less risky equities.

A balanced investment strategy is like dog paddling in a smooth, calm pool. You'll get someplace eventually, but you won't get breathless getting there.

Related or Semi-related Video

Finance: What are Balanced Funds?37 Views

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Finance a la shmoop what are balanced funds? well this is a teeter

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and this is a totter and this thing here is the fulcrum and here's you madam [Woman sitting on the fulcrum]

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imbalanced funds sitting in the middle a gentle breeze sways you left toward a

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little more yield or interest on bond investments and then another breeze

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sways you right toward a little more growth or capital appreciation from [woman swaying right]

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equities a balanced fund is a type of mutual or index fund which generally

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keeps an even ish mix of growth and income for investors who don't want the

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volatile sharp rocky mountain peaks and valleys that growth only throws at you [Growth chart with peaks and valleys]

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but well they want a bit more excitement than all bonds got it or rather they can

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handle a bit more risk in their lives than what a simple bond income fund

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would deliver to them you know a whole lot of boring yield balance is almost [Woman balancing]

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always good for zen.. oops didn't see that breeze coming

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