Seeking Balance in a Mutual Fund

Stocks, Bonds, Both? How much of each?

This week, Craig Siminski of CMS Retirement Income Planning, has some helpful information to share with us as we consider the structures of our investment portfolios.

Maintaining an appropriate balance of stocks and bonds is one of the most fundamental concepts in constructing an investment portfolio. Stocks provide greater growth potential with higher risk and relatively low income; bonds tend to be more stable, with modest potential for growth and income.

Together, they may result in a less volatile portfolio that might not grow as fast as a stock-only portfolio during a rising market, but may not lose as much during a market downturn.

Three Objectives

Balanced mutual funds attempt to follow a similar strategy. The fund manager typically strives for a specific mix, such as 60% stocks and 40% bonds, but the balance might vary within limits spelled out in the prospectus. Balanced funds generally have three objectives: conserve principal, provide income, and pursue long-term growth.

Of course, there is no guarantee that a fund will …

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 21 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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