There are many ways to build a balanced portfolio, but one of the key elements of all of these is an attempt to achieve diversity in the portfolio. The simplest approach is to select an appropriate percentage split between stocks and bonds (and potentially other types of assets) in your portfolio based on your objectives and tolerance for risk, and then select a variety of different types of stocks and bonds to fill out the allocation. This is simple enough in concept, but the manner in which this is done can be the difference between meeting your long term life goals or ending up broke – a big difference.
4Thought has its own approach to building a well-balanced portfolio that involves diversifying not just by types of assets, but also by method of investing. We use what we call Multi-Method Investing to help our clients.