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 is a Country Basket (Index...30 Views
Finance, a la shmoop. What is a country basket index fund?
All right we're picking daisies, marigolds, lilies so uh how do we [Pictures of flowers]
rephrase in Italian? Like, we want to fill a portfolio basket with just stocks [Pouring a glass of red wine]
representing the overall financial health of Italy. Is Italy healthy? While
they smoke a lot they drink a lot of wine they eat a bunch of pasta but there
always seems to be a woman from some small village who's celebrating her [Old woman at a birthday party]
117th birthday over there. Well a country basket is just an index fund of
stocks representing a country. Like we're doing Korea... South we're gonna have
in that basket dunno some Samsung, a load of Daewoo, a hunk of Hyundai and some [Company stocks being added to the basket]
nice barbecue on the side. That'd be our Korean country basket and it's a good
basket to fill if you're just bullish on a country but not really sure which
flower on which to place your bets. It's like instead of trying to decide between [The stocks in the basket turn into flowers]
roulette or poker or slots... Well you just buy stock in Las Vegas
Sands you know you bet on the entire casino, and bueno Fortuna you know good [Someone checking their cards in a casino]
luck there pal, doesn't the house always win? Yeah so why do people keep going there?...
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