Balanced Investment Strategy

Reviewed by Sweta | Updated on Aug 01, 2021



A balanced investment strategy is a method which investors can adopt to build a healthy portfolio. A suitable combination of investments can help in balancing the risks and the overall return from a portfolio. A balanced portfolio can consist of different types of stocks which may include dividend-paying stocks, small caps, and mid-caps as well.

Understanding Balanced Investment Strategy

To formulate a balanced investment strategy, one can choose companies which are steady in market performance and are defensive in nature. It may be wise to balance between defensive stocks and aggressive stocks. The strategy can help preserve capital through defensive stocks and achieve growth in aggressive stocks.

While making an investment strategy, investors should bear in mind their risk appetite and risk calculations based on past data. The other factors for risk assessment include management characteristics, product mix, regulatory issues, amongst others. Also, the strategy must include an estimation of the time for holding an investment.

Investors having a moderate risk tolerance generally consist of a fair mix of equities and bonds. A balanced investment strategy averages the risk and the return from investments. Investors who are conservative choose greater investments in blue-chip equities or bonds in order to preserve their capital, while aggressive investors can choose small caps for high returns with high risk.

A balanced investment strategy can consist of investments in government securities, such as deposit certificates, long-term bonds, and blue-chip equities. These investments yield low income but are likely to keep the capital intact.

Another portion of the investments can be into mid-cap equity stocks which are in business expansion mode and small caps which yield greater capital appreciation in the long term.


Investors who can have a fair mix of risk-free government securities and risky investments can enjoy the benefits of a balanced investment strategy. The overall return on the portfolio averages and can be consistent even in financially adverse times.

At present, it is easy to make a portfolio through various online websites. Investors can study financial data of companies and other securities and accordingly make a balanced portfolio.

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