How to build a balanced portfolio 

What is a portfolio and why is it important?

Think of a portfolio like a food budget. You don’t spend all your money on just rice or meat—you mix things up to make sure you have a balanced meal that fits your taste, health goals, and budget.

In investing, your portfolio is the mix of assets you own—like stocks, bonds, or savings.

Each type of investment plays a different role: some help your money grow faster, others protect it during tough times. Just like how you plan your meals based on your lifestyle, your portfolio should match your financial goals, how much risk you’re comfortable with, and how long you plan to invest.

Allocation is how you divide your money across those different investments. It’s about choosing the right portions for each asset type based on your personal situation.

For example, younger investors might “spend” more on growth-oriented assets like stocks, while older investors may prefer safer options like bonds or time deposits.

A well-thought-out allocation helps you stay on track toward your goals—whether that’s buying a home, funding your child’s education, or retiring comfortably. It’s not just about growing your money, but also managing risk in a way that fits your life.

What is diversification?

Diversification means spreading your investments so you’re not depending on just one to grow your money.

Imagine you run a food stall. If you only sell sisig and people suddenly want healthier options, your sales could drop. But if you offer a mix of dishes, you’re more likely to keep customers coming.

In investing, this principle works the same way. Instead of putting all your money in one type of asset, you combine different ones—such as cash, fixed income, and equities—to reduce risk and improve stability.

• Cash is like water: essential for liquidity and safety, but not the main source of growth.
• Fixed Income (bonds, time deposits) is like rice: steady and reliable, providing income and stability.
• Equities (stocks, ETFs) are your ulam: flavorful and exciting, but can be risky.

This mix cushions your portfolio from market ups and downs. If stocks fall, bonds might hold steady, and cash provides safety. Diversification doesn’t guarantee profits, but it helps protect your money and gives you more stability.

Role of fixed income in portfolio allocation

Fixed income investments—such as government bonds, corporate bonds, and time deposits—are the “rice” in your financial meal: steady, filling, and reliable.

They provide regular interest payments, making them a dependable source of income for investors who value stability. Unlike equities, fixed income tends to be less volatile, which helps reduce overall portfolio risk.

One of the biggest advantages of fixed income is predictability. When markets are uncertain or stock prices fluctuate, fixed income often holds its value or even appreciates slightly. This makes it an attractive option for conservative investors or those nearing retirement who prioritize capital preservation over aggressive growth.

It’s not about delivering spectacular returns—it’s about ensuring a portion of your portfolio works quietly in the background.

Fixed income also plays a strategic role in diversification. By combining bonds with equities and cash, you create a portfolio that can weather different market conditions. Bonds act as a cushion during downturns, providing stability when riskier assets struggle.

For investors who want steady income and peace of mind, fixed income remains a cornerstone of a well-balanced investment strategy.

Equities bring growth but also higher risks

Equities—such as stocks and equity funds—are the “ulam” (main dish) of your financial meal: flavorful and exciting. They carry higher risk, but they also offer the greatest potential for long-term growth and capital appreciation.

Equities help your portfolio beat inflation and build wealth over time. They’re best suited for investors with long-term goals like retirement or funding education.

Because equities can be volatile, pairing them with fixed income and cash is key. This way, you enjoy growth potential without exposing your entire portfolio to unnecessary risk.

Here’s a quick guide to compare these three asset classes and their roles in your portfolio:

Investing made simple: UITFs

For investors who prefer a professionally managed approach, Unit Investment Trust Funds (UITFs) offer a convenient way to access diversified portfolios without the need to pick individual assets.

Think of UITFs as a chef-prepared meal—you get a balanced mix without having to shop and cook yourself.

UITFs are designed to match different risk profiles and investment goals—whether you’re looking for steady income, capital growth, or a balanced mix of both. These funds pool money from various investors and are managed by experts who allocate across asset classes, primarily in cash, fixed income, and equities, making them an accessible and strategic option for building your portfolio.

The best part? You can start investing without having to break the bank, making it easy for both new and seasoned investors to begin their wealth-building journey.

Diversification and proper allocation

Building a strong portfolio starts with understanding how each asset class plays a role—cash for safety and liquidity, fixed income for stability and income, and equities for growth.

Diversification and proper allocation help you manage risk while aiming for returns that fit your goals. Like preparing a well-balanced meal, the right mix of ingredients ensures your financial health stays strong through any market season.

If you wish to know about Metrobank’s funds, visit Metrobank’s UITF Online. For more exclusive investment insights and ideas from Metrobank Wealth Insights, you can follow the steps here.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)

JANSSEN ROMAN is an Investment Counselor at Metrobank under the Institutional Investors Coverage Division. His expertise was built upon his previous roles as an Investment Specialist and Financial Markets Sector Management Trainee in Metrobank, complemented by his experience as a research analyst at FactSet Philippines’ Mutual Funds and ETFs team. Committed to continuing education and professional development, he is currently pursuing his Master of Arts in Economics from Ateneo de Manila University and has earned numerous other certifications and licenses from various regulators and educational institutions.