You’ve got a lot of money, and you want to make your pot of money even bigger. So you consider using something called a “conservative growth” strategy. The goal is to build wealth over time, with an emphasis on “wealth preservation.”
This is where the debate starts among pundits on what is actually a “conservative growth” strategy. The basic strategy has been an allocation of 60% in bonds and 40% in stocks. But anyone paying attention to 2008 knows what can happen.
If you want to preserve money, the purest way is just to index your money to inflation and get a return on Treasury bonds. But...what's the point of that?
So you’ll see a lot of financial companies create “conservative growth funds.” And these funds charge annual fees that eat into the return. The funds basically build a portfolio of bonds and stocks.. people could have just as easily learned the strategy and built the portfolio by hand in a matter of 20 minutes. Sounds like a plug for a trading course.
Related or Semi-related Video
Finance: What are Balanced Funds?37 Views
Finance a la shmoop what are balanced funds? well this is a teeter
and this is a totter and this thing here is the fulcrum and here's you madam [Woman sitting on the fulcrum]
imbalanced funds sitting in the middle a gentle breeze sways you left toward a
little more yield or interest on bond investments and then another breeze
sways you right toward a little more growth or capital appreciation from [woman swaying right]
equities a balanced fund is a type of mutual or index fund which generally
keeps an even ish mix of growth and income for investors who don't want the
volatile sharp rocky mountain peaks and valleys that growth only throws at you [Growth chart with peaks and valleys]
but well they want a bit more excitement than all bonds got it or rather they can
handle a bit more risk in their lives than what a simple bond income fund
would deliver to them you know a whole lot of boring yield balance is almost [Woman balancing]
always good for zen.. oops didn't see that breeze coming
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