Easy Steps for a Balanced Portfolio

First of all, we should define the term “balanced or mixed financial portfolio”, which is a portfolio that contains an investment mixture of financial assets at a right portion for each one of the components, in order to gain a good balance between risks taken and desired results (risk/reward ratio). A well structured balanced portfolio gives access to more speculative financial instruments without being exposed to major risks.

If you set up long-term goals through a balanced portfolio you’ll prepare the ground to generate long-term profits. Your investment timeframe should be for a decade or more. This doesn’t meaning deterministically that you are going to receive your profits only years and years from now. You have a lot of chances to achieve your aims faster than you really expect.

Moreover, we recommend you following another one basic rule which is diversification. No matter what kind of investments you have in your portfolio, you always need to follow the basic principle of not putting “all eggs in one basket”; whether it is a financial category or a specific financial product. For example, if you are going to buy some dividend stocks and you are about to invest $10.000, diversify your portfolio and get shares from 10 different companies, or if you are going to copy trades from other successful traders into your FX account, there is no need to follow just one trader, even if he is the best trader in the world.   

Finally, you should put some specific objectives about how to manage your potential profits. Three easily understood ideas are:

  • 100%           for capital growth purposes by reinvesting profits
  • 100%           for extra income generation
  • 50% / 50%   mixed aims (capital growth / extra income) 


Balanced Portfolio Example

Below, you can see schematically, a hypothetic balanced financial portfolio. By following this portfolio’s type, you are about to start your own, personal “mutual fund” with a lot of chances to get even better returns from the professionals. Surely, the following case study doesn’t constitute a recommendation for investors to follow this perspective, but it is only written for academic use. Actually, an investor needs to work hard to achieve his aims or to trust professionals for that purpose. In the end, any person is free to set his own goals and to make his own investment plans in the manner that he chooses.

1. Cash 10% In banknotes - in a safe place
2. Bank Deposits 10% Money placed into a bank institution for safekeeping with a base interest rate and easy withdrawal methods for high liquidity
3. Fixed Deposits 10% Fixed deposit refers to a savings account of deposit that pays a fixed rate of interest until a given maturity date
4. Gold 10% Gold is the most common and tradable of the precious metals that always have a remarkable value
5. Government Bonds 10% Government bonds that generally considered of low risk, like the US Treasuries, the Gilts (UK) and the Bunds (Germany)
6. Dividend Stocks 20% Buy trusted - low risk - stocks that give remarkably dividend yields for a long period of time (decade or more)
7. Penny Stocks 5% High speculative placements in small cap companies (penny stocks) with great expectations of a forthcoming success story
8. Forex Copy Trading 20% Visit ZuluTrade - an EU regulated broker, with a copytrade platform to get access to free of charge copy trading transactions (social trading systems)
9. Binary Options through Signal Service 5% Visit 24option - an EU regulated binary options broker to get access to signal services
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