Here's a fund that tries to provide you with the best of all worlds. A balanced fund buys common stock, bonds and preferred stock to obtain the highest possible return with low risk. These funds usually have a set percentage mix, such as 75 percent of the fund in stocks and 25 percent in bonds. Balanced funds usually don't offer as high a yield as a pure stock fund, but they don't hurt as much when stocks are in decline.
Types There are a variety of balanced fund styles, though all have the same basic goals.
Expect to see U.S. Treasuries and well-known stocks such as General Motors in their portfolios. Balanced funds definitely won't harbor a lot of surprises for you. A balanced fund is a reasonable investment, with reasonable income and reasonable growth. It's a wise vehicle for someone with a small amount of money to invest, since it provides intelligent diversification. It's also smart for an individual retirement account .