Building a Balanced Portfolio

Dec 18

The first step in creating a balanced portfolio is to realize that the “balance” doesn’t refer to the investments contained in the portfolio – it refers to the goals, preferences and risk tolerances of the investor. Investing is about increasing the return on your money over time to potentially higher levels than can be obtained from a savings account, but the trade-off is increased risk.

How can you build a balanced portfolio to help you reach your long-term goals? We provide a step-by-step guide.

Key concepts we cover: time horizon and portfolio goal; risk tolerance; conservative, moderate and aggressive portfolio asset allocations.

Time Horizon and Portfolio Goals

Determining your appropriate balance starts with defining two variables: time horizon and risk tolerance.

It’s common to use a formula of current age or x years to retirement to define your time horizon, but a more individually-tailored approach is to incorporate the goal of the portfolio. In other... ...