What is a balanced mutual fund
Have you ever wondered what is a balanced mutual fund? Basically a mutual fund that is balanced is one that is a combination of bonds, stocks and cash holdings. The goal of this type of fund is to conserve capital, appreciate capital as well as create an income stream.
The actual term balanced isn't used too much these days the term that is more common today for this type of fund is asset allocation.
A good mutual fund will enable you to be more diversified with your money. Not only can you hold stocks and bonds but you can do so across different countries and different sectors of these holdings. You can actually put your own mutual fund together if you want to go down that path, but it is much easier to have someone that is experienced in this area to put one together for you.
Your mutual fund portfolio should include a number of different funds with multiple investment objectives. There are funds that will do this automatically so there is no need to arrange a fund manager to do it for you. There are quite a few different combinations available and if you have no experience in this area it can be quite overwhelming, not to mention confusing.
If you have an idea of what kind of mutual fund you want then you can call and have a prospectus sent out to you. There is some investment terminology that can be difficult to understand so if you have trouble you may want to find someone that can explain it all to you. It is important to know everything about the fund before you invest as this is your money and your future at stake.
Once you have a look through the prospectus and get an understanding of it then you can make a decision about how you want to proceed. One factor that you will want to consider is the percentage of the combined funds. Usually a 50/50 percentage is good.
When you have made the decision as to what fund to proceed with then you just hand over your investment money and the mutual fund manager will handle everything for you. They will deal with the purchasing of bonds and stocks and other holdings and all you need to do is sit back and watch your funds grow.
When looking for balanced mutual funds, keep in mind that this term isn't really used very much these days, so you will want to look for asset allocation. Some funds will also use a year number and these funds will usually have more bonds than stocks and basically the closer that the year is to the year on the fund then the better the fund will perform. You really do need to do your research before jumping into anything related with investments so you have some idea of what is involved and what the different terms mean.
Balanced mutual funds do not mean that you have a completely safe investment as these funds are just as volatile as any stock investment. There is always some risk involved with stock investing and that is one reason why it is good to balance your funds so you don't have all your eggs in one basket. By investing in several different types of funds you can reduce your overall risk.
TAGS: what is a balanced mutual fund, mutual fund
Article Source: Messaggiamo.Com
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