Setting Up a Balanced Investment Portfolio

Monday, September 26th, 2016 by Mike

Investment_PortfolioIn the recent economic problems, a lot of people have lost a lot of money. This included their life savings, their home, and in some cases their retirement money. Many people were hurt financially. While no one can give an absolute guarantee that any investment is completely safe, one strategy that has proven well over the years is to set up a balanced investment portfolio.

The Advantages of A Balanced Investment Portfolio

At different times in America, people have lost money due to unexpected changes in the economy. This was especially true for those who invested heavily – too heavily – on one particular market. With the coming of the new millennium, for instance, a lot of people lost money in the collapse of the dot.coms. Of course, with things looking well like they did at the time, many people invested all they had in the industry. Then suddenly – many lost a lot of money.

A balanced portfolio can prevent such a catastrophic loss, if it is spread out wide enough. Since multiple markets rarely crash at the same time, careful investment choices can lead to a much stronger degree of security when losses do occur.

What Is A Balanced Portfolio?

A balanced investment portfolio means that you have distributed your investment money. This needs to be done in two ways to provide you with the greatest level of protection against loss. First, your money will need to be spread out over different types of investments – such as in stocks (domestic and foreign), bonds, mutual funds, real estate, etc. Secondly, your money must also be spread out into different types of industries such as telecoms, electronics, metals, commodities, etc.

Make Investment Management Changes as Needed

Investment portfolios occasionally have to be adjusted as the economy changes. Although a portfolio can tolerate some degree of being left alone, there will need to be some investment portfolio management to make the best possible gains.

Using an investment company for this purpose may or may not be to your advantage. It would depend on how closely they watch the market and the timing of any changes made. You would have to select the company based on its reputation, investment services offered, and the investment strategy used.

At times, you may want a larger percentage of your money to be put into investments that gain high amounts of interest – such as some stocks. At other times, you may want to put more into bonds – such as when the economy is poor.

Balanced Portfolios Will Vary Between Two People

Every person’s needs and goals for their investment will differ from everyone else’s. This means that you will need to determine what your own financial reasons and purposes are for your investments. You may want to save for retirement, pay off your mortgage and other debts, help your grandchildren with college expenses and tuition, travel around the world, etc. Your age and how soon and how much money you want to accumulate should also affect how you invest.

Get Financial Investment Advice Before Making Your Decisions

The more you know about investing, the safer your money will be. While an investment portfolio manager can certainly help you, they should not be relied upon solely to make the best decisions. Remember that they also are concerned with ensuring that their own company is making a profit, too, and this may cause conflicts at times.

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