What does it mean to have a balanced portfolio?

  • By William Bryant
  • 03 Apr, 2017

Diversified Retirement Portfolio

Nest Egg

Balanced portfolio is yet another term used in the financial consulting business to provide a sense of comfort to all who have an investment portfolio, or what is commonly described as a retirement nest egg.

Retirement Portfolio Terminology

Some investment advisors or brokers communicate with terms like aggressive, moderate, or conservative risk investments . An example of those investment products might include stocks, bonds, electronically traded funds, or mutual funds. To many of those advisors, a “balanced portfolio” means you have some of each level of risk in your portfolio, and that will “balance” your overall risk. This would minimize your chance of losing any portion of your nest egg.

All Eggs in One Basket?

Still other advisors will consider having many different stocks (blue chip, utilities, foreign, energy, S&P, NASDAQ, etc) as their definition of balanced. They are using the “don’t put your eggs in one basket” theory. The major concern for both of these strategies is what we call the Titanic effect. When that ship sank, everyone from the first class cabin down to steerage suffered. Whenever you have a market crash (remember 2003 and 2008!) you can take a devastating blow to your nest egg because all of the aforementioned investment vehicles are tied somewhat to what happens in the stock market.

Diversified Retirement Portfolio

S2S Silver Services promotes a different definition of balanced portfolio. Indeed, we prefer to use the term diversified portfolio. Your portfolio should contain a mixture of different types of investment products. Most important is that you also choose investment products that are not dependent on the results of the stock market. The mix would of course include some stock market products but it should also include products like annuities, precious metals or gems, real estate, and yes, even some CDs. We believe that this is the true definition of “balanced” and with this approach, when the Titanic starts to sink, you may be one of the lucky ones who has several lifeboats to keep your retirement nest egg afloat.

Working with S2S Silver Services will greatly simplify your life. Let us help you navigate the complex and confusing labyrinth of Medicare, Medicare supplements , and many other aspects of retirement planning. Take advantage of the best healthcare, annuity, and investment opportunities available. We will help you make sound financial decisions.

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