What You Need to Know about Balanced Mutual Funds

Mutual funds are companies that sell shares in stocks and bonds to individual investors. Balanced mutual funds are mutual funds that manage low-risk investments by allocating cash assets across a number of stock and bond options, including ordinary shares, preferred shares, and high-yield shares. Generally, these funds provide better options than regular growth funds when an economy is in decline.


Overall, balanced mutual funds offer many of the same opportunities and benefits as regular mutual funds. For example, these funds allow individuals to invest in many different companies and stock types, and thus diversify their portfolios. Additionally, these investment options carry with them professional financial management; in other words, buying into a mutual fund guarantees a financial advisor to manage personal portfolios.


Balanced funds should not significantly affect an investor's overall income. In other words, these funds allow individuals to maintain their current lifestyle by allowing investors to choose how much they would like to set aside in contributions each month. Then, ideally, the funds will slowly but consistently put money away for a retirement fund, turning a low-risk investment choice into an opportunity for steady long-term growth.

Risks and Returns

Because balanced mutual funds handle low-risk investments, they do not often exhibit the high returns characteristic of some other stock and equity funds. This does not mean that these particular funds are risk free, however, since like any other investment fund, they ebb and flow with the economy, and it is possible to lose money on these investments. Additionally, because funds are spread across a number of different stocks, it can be more difficult to keep track of market fluctuations. To be safe, individuals are general encouraged to invest in only one balanced fund at a time.

Financial Advisors

The best way to learn about investing in balanced mutual funds is to consult with a variety of mutual fund companies. A financial advisor or mutual fund manager should be able to provide potential investors with the necessary information about local funds, international funds, growth rates, and potential risk factors. These advisors will also consult an individual's financial records to determine whether or not a balanced mutual fund is the right option, and how much can safely be invested per month.


Some of the most well-known balanced mutual funds include the Wellesley Income Fund, the Dodge & Cox Balanced Fund, and the Vanguard Star Fund. These funds have been in operation for decades, and have proven to generate consistent returns for investor's retirement funds. Each of these companies offers something different to accommodate the various desires of investors; for instance, Wellesley allocates a higher percentage of funds to bonds, while Dodge & Cox devotes more to stocks and government securities.

Because balanced funds do not require the investor to choose only one particular investment option (which may potentially be a high risk), they are often recommended for those just starting up an investment portfolio. This is particularly true of the Vanguard Star Fund, which offers low expense rates, minimal initial investment commitments, and a conservative investment percentage.