Smart Investment Strategies for Conservative Investors in 2018
As we enter 2018, investors are reflecting on the investment decision they made in previous years. There are several considerations, especially with various unknowns based on domestic and geopolitical realignments that could have an adverse impact on investment portfolios.
In a long-term, low-risk investment season, here are some of the smart investment strategies for conservative investors in 2018.
1. US Savings Bonds.
The ultra-safe and smart conservative US Treasury bonds offer fixed-rate savings bonds adjusted for inflation. As a government-backed investment, US Savings Bonds are offered at market rates and guaranteed against default and are therefore a perfect investment strategy for conservative investors.
2. High Yield Savings Accounts
This alternative savings product provides a safe and slightly higher cash return over a medium term period. Investing in high-yield savings gives the investor a fixed interest rate for profit at a very competitive market price.
Commodities such as precious metals offer a smart alternative to currency hedging as a hedge against inflation and other adverse economic uncertainties. Consequently, commodities such as agricultural products provide an excellent alternative for diversification and are therefore considered smart and conservative investment strategies for 2018.
4. Individual corporate bonds
Corporate bonds are issued by companies as investor debt financing to raise capital to meet the financial needs of the company. Corporate bonds are competitive, depending on the company and its financial position, and therefore have higher returns compared to treasury bonds.
However, investors must perform due diligence on the risk status of the respective company based on the various financial analysis tools to determine the risk and probability of default. Consequently, it is good investment practice to invest in investment grade bonds rather than “junk” bonds. International equity funds
5. Individual actions
Investing in public companies for the long term offers the investor the opportunity to be a shareholder and obtain capital in the company. Buying a company at the correct share price offers the investor the opportunity to grow with the company. Consequently, individual stocks not only produce returns on the share price, but also dividends on your capital.
However, there is still the possibility that the company will slow down due to internal or external forces affecting the market.
6. Fixed unit trusts
Fixed unit trusts are a mutual fund investment scheme that offers a fixed return based on the units held in a given investment. Mutual funds are managed by investment trustees who divide investment earnings. Investing in fixed unit trusts is a smart and conservative investment strategy because it guarantees annual returns.
7. Funds for the life cycle or target date
This is likewise a trustee-managed mutual fund for savvy conservative investors who want to guarantee access to their money after a particular period. Consequently, the funds generate fixed returns for the investor. For example, a target date fund with a maturity period of three years could earn interest of 5-7%, and this is what the investor will get from their investment.
Despite being conservative and smart, all investment decisions should be made based on the risk profile of an individual portfolio.