what is a balanced portfolio

crisp

i understand that there are four main asset categories.

cash, bonds, property and shares (not sure if gold is separate or comes under one of the four).

but what is considered a balanced portfolio? one to give income and growth without being reckless?

currently, I am 15% in cash, 20% equities, 50% property (main home), 15% bonds. Im not sure whether your main home should be taken into account.

does this seem balanced? my equities are 55% uk, 25% asia, 15% usa and 5% latin america.

jon3001

crisp wrote: »

i understand that there are four main asset categories.

cash, bonds, property and shares (not sure if gold is separate or comes under one of the four).

Gold is classed as a commodity investment. Other ways to get exposure to commodities include: commodity futures (e.g. via managed fund or index) and commodity stocks (e.g. mining companies).

crisp wrote: »

but what is considered a balanced portfolio? one to give income and growth without being reckless?

I prefer the term 'efficient portfolio'. The efficient portfolio is the one that gives the greatest return for a desired amount of risk. Not everyone wants to take on the same amount of risk either because of personal tolerance or the investment time horizons involved.

crisp wrote: »

currently, I am 15% in cash, 20% equities, 50% property (main home), 15% bonds. Im not sure whether your main home should be taken into account.

I wouldn't take your personal residence into account. It's main purpose should be a home rather than an investment.

If you directly rent out property or hold property funds then class those as part of your portfolio.

Overall your remaining spread (60% cash/bonds, 40% equities) strikes me as conservative. This would be suitable for someone looking to liquidate their position in the next few years and not have to worry too much about capital fluctuations.

crisp wrote: »

does this seem balanced? my equities are 55% uk, 25% asia, 15% usa and 5% latin america.

Any exposure to small companies (either UK or international)?
Is 'Asia' developed Asia Pacific (e.g. Australia, Hong Kong) or does it include countries like China and India? Does it include Japan?
Any particular reason why there is no European exposure?
Is there some reason to favour Latin America over other emerging markets (India, China, Russia, Eastern Europe)?

I think your equities could probably be more diversified and you could even allocate a portion of those funds to commodity futures. So on balance I think you're taking on more risk than you need to.

dunstonh

currently, I am 15% in cash, 20% equities, 50% property (main home),

Scrub your main residence out of the equation. Its where you live. You will always need somewhere to live. You may make gains if you downsize but worry about it then when that becomes cash.

my equities are 55% uk, 25% asia, 15% usa and 5% latin america.

If you are using funds then you have the main sectors: cash, UK fixed interest, international fixed interest, property, UK equity, Euro Equity, Far east exc Japan, Japan, N America, Specialist and Emerging Markets.

Within those main sectors you can alter the spread or diversify further. For example, you may look at income, recovery, tracking, blend etc.

does this seem balanced? my equities are 55% uk, 25% asia, 15% usa and 5% latin america.

Balanced in terms of risk - No.
Balanced in terms of diversification - No.

Milarky

...needs at least THREE legs...