How Balanced Funds Can Help You

August 28, 2014 Posted by admin

There are days when you wonder about how you can make some extra cash to make life a little easier. Well, one of the things that you can do is invest your money, allowing it to grow. Equities are undoubtedly the most lucrative places where you can invest, but those tend to run a high risk of losses as well. Debt funds are much safer, but they aren’t nearly as lucrative as equities are. So how do you make the most of your investments, including both the lucrativeness of equities and the safety of debt funds? The answer lies in balanced funds.

These are hybrid funds that incorporate the best of both worlds in a single portfolio. Usually, they invest in stocks, bonds and sometimes even the money market. If you’re looking for a balance of risk and stability, then this is undoubtedly the one for you. The trick in getting the fund to work for you is in striking the right balance between debt and equity. The most mutual funds maintain their investments in 60:40 ratios. This means that when you invest in balanced funds, 60% of your investments are locked in equities and the rest of it in debt funds. While this is a general investment practice, it may vary depending on market conditions. For example, if there is a bull run in the market, then your fund manager could very easily start leaning heavily towards equities in hopes of higher profit. This is a risky tack to take – a simple mistake could cost you a lot. But if it rings true, you’d have hit the jackpot.

Remember that when you invest in mutual funds, you’re going to have to make careful decisions. You could avoid the majority of pitfalls of investment if you were to clearly and concisely discuss what you want with your fund manager. You could give directions of how much of your money you want invested where. You need to be proactive in checking up your investments, ensuring that you’re in the loop about how your investments are getting along. You also need to be sure that you choose a competent and trustworthy fund manager to handle your money. Look up various mutual funds; look at their history and performance for at least a period of 3 to 5 years. If the performance is to your satisfaction, then go ahead and invest. Just make sure that you peep in regularly to know what is going on. After all, it is your money at stake!

Comments are closed.