What Makes up a well Balanced Portfolio

A good portfolio will be well distributed with stocks, bonds, and money market funds. There will be little or no get rich schemes.  Most investments will be in  slower, but more secure stocks, bonds, and long time investments. This is the first thought, then others kick in. At what age is retirement being considered? How secure is the job that makes saving for retirement possible.

When young and planning for retirement, a person can afford to be a little more adventurous with their money, when nearing retirement with possibly only fifteen years until age seventy, then caution is the guide word. Age seventy is about the time most people start really needing their savings. That age, at best only a supposition, a benchmark time, but that designation is needed for accurate and more meaningful calculations.

 Stocks are always good when they are with companies that pose little risk. Little risk of course means buying them and allowing the assets to accumulate over time; it means less speculation by buying and selling, but allowing the dividends to accumulate and to go toward purchase of more stocks in the company. Still, stocks are often risky so don’t overload the portfolio.

Bonds require time and patience and they are a good alongside stocks and other more rapid turnovers. With less risk they are good to buy since by the times they are ready to pay out, their yield, while less than expected of stocks, will be more certain. Beware, thought of junk bonds that often promise more than they can deliver. They are comparable to a plastic Easter egg as opposed to the real thing.

Other diversified means of getting quick cash, against having money tied up for the long haul in stocks and bonds are savings accounts, CDs, treasury bills and money market funds. While less money is made off these, they will become the more active part of a well balanced portfolio. Money will be relatively available when needed for unexpected expenses, but will still be earning and not simply accumulating in checking accounts.

Diversification is the guide word among investment counselors who advise dividing up the portfolio into three equal categories of stock, bonds and money market accounts. Their reasoning is sound. It is almost never heard of all three having all three lose money at the same time. no matter the loss in one, the others will be there to assure some money benefits will be forthcoming.

Retirement seems a long way off when one first starts work, and all too often saving for it is neglected. There may be valid reasons for this, saving for child’s education is one legitimate excuse.  Money for expensive vacations and impressive lifestyles are less noteworthy reasons for not having adequately  planned  for retirement. Believe the experts, when life is being lived fully, it does not creep, it races.  

Be prepared with a well balanced portfolio that  takes all probable situations in mind. Present comfort, vacation money, unforseen events such as an illness, or a death; planned events, college for sons and daughters, all need money and lots of it. Life and living is not predictable no matter how well planned, neither is money to afford them. Therefore, the best way to be prepared is to have a well balanced portfolio.