As we enter 2018, investors are reflecting on the investment decision that made in previous years. Several considerations are in place especially with several unknowns based on the domestic and geopolitical realignments that could have an adverse impact on investment portfolios.
In a season of low-risk and long-term investments, here are some of the smart investment strategies for conservative investors in 2018.
1. U.S. Savings Bonds
The ultra-safe and smart conservative bonds from the U.S. Treasury offers an inflation-adjusted fixed-rate savings bonds. As a government-backed investment, U.S Savings Bond are offered at market rates and guarantee against default and hence are perfect investment strategy for conservative investors.
2. High-Yield Savings Accounts
This alternative savings product provides a safe and slightly higher yield on cash over a mid-term period. Investment in high-yield savings earns the investor a fixed interest rate for returns at a very competitive market price.
Commodities such as precious metals offer a smart alternative to hedging currency as a protection measure against inflation and other adverse economic uncertainties. Consequently, commodities such as agricultural products provide an excellent alternative for diversification and hence are considered to be smart and conservative investment strategies for 2018.
4. Individual Corporate Bonds
Corporate bonds are issued by companies as debt financing from investors to raise capital to meet the company’s financial needs. Corporate bonds are competitive, depending on the company and its financial position and hence have higher returns compared to treasury bonds.
However, investors should perform due diligence on the respective company’s risk status based on the various tools for financial analysis to ascertain the risk and probability of default. Consequently, it is good investment practice to invest in investment-grade bonds as opposed to “junk” bonds. International stock funds
5. Individual Stocks
Investing in public companies over the long-term offers the investor an opportunity of being a shareholder and getting equity in the enterprise. Buying into a company at the right share price offers the investor a chance to grow with the company. Consequently, individual stocks not only yield returns on the share price but also dividend on their equity.
However, there is still the possibility of the company slowing down because of internal or external forces that affect the market.
6. Fixed unit trusts
Fixed unit trusts are a mutual fund investment scheme that offers fixed return based on units held on a certain investment. The mutual funds are managed by investment trustees who divide the gains from the investments. Investing in fixed-unit trusts is a smart and conservative investment strategy because it guarantees returns annually.
7. Lifecycle or Target-Date Funds
This is equally a mutual fund managed by trustees for smart conservative investors who want to ensure access to their money after a particular period. Consequently, the funds yield fixed returns for the investor. For example, a target-date fund with a three years maturity period could yield an interest of 5-7%, and this is what the investor will get on their investment.
Despite being conservative and smart, all Investment decisions should be made based on an individual portfolio’s risk profile.
Chris Bouchard is a strategic consultant who works with non-profit leaders and social entrepreneurs to apply concepts and techniques to identify complex strategic issues, find practical solutions, and devise strategies to create and win a unique strategic position. He also offers project development, proposal writing, and project evaluation services.