when determining what strategy to select it is important for investors to consider not only their objective capacity to bear risk such as their net worth and income but also their subjective risk tolerance 
balanced fundsa balanced fund is a mutual fund that contains both a stock and bond component as well as a small money market component in a single portfolio generally these funds stick to a relatively fixed mix of stocks and bonds such as 60 40 stocks to bonds balanced mutual funds have holdings that are balanced between equity and debt with their objective somewhere between growth and income this leads to the name balanced fund balanced mutual funds are geared toward investors who are looking for a mixture of safety income and modest capital appreciation typically retirees or investors with low risk tolerance utilize balanced funds for healthy growth and supplemental income the equities component helps to prevent erosion of purchasing power and ensure the long term preservation of retirement nest eggs example of a balanced investment strategytrishia is a recent university graduate in her mid 20s she is new to investing and has about 10 000 to invest although trishia intends to make a down payment within the next few years she has no immediate needs for her investment capital and would be able to postpone withdrawing her capital until a more favorable time in the event of a sudden market decline objectively speaking trishia s youth and financial circumstances put her in a good position to adopt a relatively risky investment strategy that has high long term growth potential however given her subjective risk tolerance she opts for a more conservative approach using an online investment platform trishia decides on a balanced investment strategy featuring a 50 50 split between fixed income and equity securities the fixed income securities consist mainly of high grade government bonds along with some highly rated corporate bonds the equities consist of blue chip stocks all with a reputation for stable earnings and dividend payments investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal 