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Investing always comes with a certain amount of risk depending upon the particular investments you decide to put your money into. It may be possible for you to mitigate your risk by adopting a more conservative investing strategy. You just need to be aware your potential return will also be diminished by utilizing more conservative investments in your portfolio. On the other hand, it is important to have a proper understanding of those assets classified as conservative and how they should be integrated into your overall conservative strategy. 

Defining conservative investments 

An investment is considered conservative when it provides a higher likelihood of preserving the purchasing power of an investor’s money. However, a conservative investment must also do this with a minimal amount of risk to the investor. 

Characteristics of conservative investments 

To identify potential conservative investment options, you will have to understand what to look for. There are three characteristics you can use to spot a conservative investment: safety, personnel, and market environment of the industry. 

Safety of an investment 

First, an investment considered conservative should keep your capital safe in the face of adverse market conditions. In order for a stock to accomplish this, the company’s cost of production and operations should be low which allows for the business to maintain at least some profit or a relatively small loss during years of poor economic conditions. 

Also, the company should have a solid marketing and research department allowing it to stay up to date on the latest trends in the particular industry. Lastly, the business’s management team should be highly competent to ensure efficient management of finances. 

Management personnel 

Really what makes a business go is the people behind the business who implement the operations. This is why for a stock to truly be a conservative and safe investment, the business needs to have a competent and steady-handed management team. Therefore, make sure to thoroughly research the background of the executive team and the management personnel to determine if they have a strong track record in business. Ask yourself if the team has the right knowledge and experience to see the business through challenging market environments. 

Industry analysis 

Lastly, it is important to analyze the landscape of the industry and market in which the business is operating within. You will want to consider the number of competitors fighting with the business for market share. Make sure to investigate how easy it is for future competition to enter the market. The possibility for increased regulatory scrutiny within the industry from the government can also play a role in future potential for profit and growth. 

Developing a customized investment plan 

Now that you have a basic understanding of how to invest conservatively, you will need to roll up your sleeves and start researching the potential investments you may want to be involved in. This will take considerable time and effort to do this properly. You will also need to have a strong understanding of financial markets and economics. 

On the other hand, you don’t have to do all of this on your own. Call our team of experienced advisors for help in determining what investment strategy may work for you.


Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.