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.
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Finance: What is a Diversified Mutual Fu...20 Views
finance a la shmoop what is a diversified mutual fund? all right people
listen up it's lots of investments stocks bonds exposure to risk and reward [Risk and reward punch man in face]
everywhere energy, telecom, insurance, real estate, banking, chemicals, tech, retail not
enough diversity yet well those are just sectors or industries and there's a
whole bunch of them what about geography geographic diversity the US, Russia, China
Europe someday maybe Mars Elon what do you think well maybe exposures to [Elon Musk floating in space]
different currencies or commodities cycles as the diversity you seek hmm
well that's diversity Benetton eat your heart out so the bigger question is why
would you want such diversity? well the idea is that you mitigate risk by being
diverse the don't put all your eggs in one basket thing if one investment goes [Value of investment graph appears]
bust well at least you have plans B C and D to fall back on and if this is
grabbing you check out our videos on efficient markets theory for more on the
subject or maybe diversify your knowledge and watch all of our finance
videos food for thought and you know please click on the ads that we got to [Man holding begging sign]
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