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.