The proportion of stocks versus bonds in a portfolio will have a major impact on long-term returns and short-term volatility.

 

Over the long-term, investments in the stock market have historically achieved much higher returns than high quality bonds. However, the higher long-term returns from stocks have been accompanied by much higher fluctuations in values in the short-term. Investors who are concerned with the possibility of large month to month and year to year volatility often find a balanced portfolio ideal for their needs.

 

We help our clients choose an appropriate allocation based on their own investment objectives and constraints. Among the factors we review are client tolerance for volatility versus desire for growth, current withdrawal requirements, and expected future withdrawal needs.

 

 

In addition to managing the stock portion of a portfolio and the bond portion, we also manage the balance between asset classes. Over time, the actual allocation will vary from the intended allocation due to varying returns of stocks versus bonds in the portfolios. We regularly review portfolios and rebalance the allocation as needed to meet original client targets.

 

 

The objective of a balanced approach is to take advantage of the long term historic characteristics of different assets. However, these characteristics do fluctuate and cannot be guaranteed.