IS YOUR BALANCED PORTFOLIO TRULY BALANCED?

Recently, we have seen a lot of so-called “balanced portfolios” from prospective investors with one of two concerns.  Either they have a typical 40%-50% weighting in bonds that earns meagre returns, or in search of higher returns, they have 70%-80% of the portfolio invested in equities. It’s rare to see a cash weighting above 5%. For different reasons, these strategies represent more risk than many people realize or are comfortable with.

These risk and return factors are why we think the industry standard model of a “balanced portfolio” of 60% equities/40% bonds is broken. You’re forced to choose between low returns or high risk and it’s a no-win solution for investors wanting a balanced approached. Here’s why and what you can do about it: