Growth typically means more “growth oriented stocks” that are focused on re-investing the earnings and not paying dividends to shareholders. Higher returns are expected by shareholders because they are willing to accept more price volatility and risk.
Income typically means a basket of corporate bonds, municipal bonds and or mortgages that generate income to pay out to their shareholders. Lower returns are expected by shareholders and they are willing to accept less price volatility and less risk.
Balanced (Growth and Income) are typically a combination of growth stocks, divided-paying stocks, and a mix of corporate bonds and mortgages. Investors interested in this category are typically in transition from their productive earning years to their retirement years. They are transitioning from assuming more risk to accepting lower potential returns and less risk.
As you approach retirement, hopefully your income will come less from salary and more from some type of income generating instrument, such as bonds. As you approach age fifty five and have ten to fifteen years left in the workforce (based on the traditional idea of retiring at age sixty five), any financial planner will suggest that your portfolio mix be more balanced, such as a mix of dividend paying stocks and bonds.
If there isn’t a 401(k) program you can participate in through your company, then you need to start looking at other tax qualified programs on your own. Individual Retirement Accounts are the most popular choice. There are two types – Traditional IRA and Roth IRA.