How to Manage a Balanced Fund

Investing your money isn't something you should take lightly. Your best defense against losing your future retirement cash is knowing about different types of investment options and how they work. Sometimes, however, it's easy to get lost in the world of investment terms and fees. Balanced funds are one way to navigate through these murky waters, as they're designed to give investors both growth and income with minimal effort. Take a look at what balanced funds are and how they may be able to help you reach your investment goals.

Understand Your Balanced Fund

Learn about your potential investment. Balanced funds are designed to provide long-term capital appreciation, as well as consistent income through investments in a balance of relatively low-risk stocks and bonds.

Study the motivation behind your fund. The theory behind balanced funds is that bond and equity markets don't traditionally move together, which provides investors with a backup in the event that one of these markets experiences a downturn.

Find out what percentage of your fund is allocated for stocks and what percentage is invested in bonds. Most balanced funds use a ratio of 60 percent stocks to 40 percent bonds, but this is not always the case.

Decide whether a balanced fund is something you want to invest in. The cost of investing in a balanced fund can often exceed the costs of purchasing bonds and stocks yourself and trying to manage them on your own.

Buy your stocks directly from the fund manager, if possible. This is the least expensive way to purchase shares. However, you can also go through a broker or buy from a fund supermarket.

Appreciate the convenience of your balanced fund. Since balanced funds are designed to give investors good growth with relatively low risk, they are easy to manage.

Examine your portfolio every year to re-balance your fund. Being attentive to your fund will allow you to receive maximum profits from your investment.