Risk Profile – Balanced Growth Investor

Balanced Investor Risk Profile: Building a Strong Balanced Growth Portfolio

Q: What are the three types of risk investors?

The three main types of risk investors are conservative, balanced, and growth investors. A balanced investor seeks moderate risk and returns, while conservative investors prefer stability and growth investors aim for higher long-term returns through greater market exposure.

Q: What is a Balanced Growth Investor?

A Balanced Growth Investor is someone who maintains a balanced growth portfolio combining both defensive and growth assets. This balanced investor risk profile helps achieve steady returns while managing market volatility effectively.

Q: What is the 3 Investment Strategy?

The three investment strategy refers to allocating funds among conservative, balanced, and growth portfolios. This diversification allows investors to manage risk, improve stability, and achieve a balanced growth approach suited to their financial goals and risk tolerance.

Q: Which investors avoid risk?

Conservative investors generally avoid risk and prefer stable, low-volatility investments. Unlike a balanced investor who accepts moderate risk for higher returns, conservative investors prioritize capital preservation over growth.

Q: Which is better, Growth or Balanced Fund?

Choosing between a growth fund and a balanced fund depends on your risk appetite and goals. A balanced growth portfolio offers stability and steady performance, while a growth investor seeks higher returns with greater risk exposure. Both play vital roles in a diversified investment strategy.

The investment objective of a Balanced Growth investor is to place an emphasis on longer term growth using a combination of asset classes to moderate some volatility.

A Balanced Growth portfolio looks to invest around 70% in growth assets (eg equities and property) and the remainder in defensive assets (eg cash and fixed income). The figure of 70% is a general benchmark; actual allocations over time will vary around this as investment conditions change and investment managers take opportunities to improve returns.

This portfolio suits investors who are willing to accept higher levels of investment value volatility in return for higher potential investment performance, however some capital stability is still desired.

Such a portfolio is suitable for investors with a medium to longer term investment time frame with no need to access a large part of their investment over that time. It is important to note that the value of your capital can move up and down over time, particularly in shorter time spans. Hence these investments should be considered with a minimum time frame of 5 years.

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Investment objectives – Balanced Growth
Minimum investment period	5 years
Returns
Forecast average annual return over 10 years	6.7%
Risk
Probability of a negative return over a single year	19.0%
Expected negative years out of 20	3.8
Forecast rate of returns
1 year	-7.7% to 24.1%
5 years (per annum)	0.3% to 12.9%
10 years (per annum)	2.5% to 11.1%
20 years (per annum)	4.6% to 10.5%

Asset allocation – Balanced Growth	Target %	Minimum %	Maximum %
Defensive Fixed Income	9	0	35
Defensive Alternatives	14	0	30
Cash	7	0	20
Total defensive	30	20	40
Australian Equities	24	15	55
Global Equities	29	15	55
Property & Infrastructure	7	0	30
Growth Alternatives	10	0	20
Total growth	70	60	80

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