I meet people every week that tell me that they are a ‘Conservative Investor’. I’m always intrigued by this label they claim for themselves. What do people really mean by this? Do they really know what they mean? And who’s telling them that what they’re investing in actually makes them a conservative investor? These questions aren’t always easy for people to discuss. Some people just ‘Let my guy handle it’ and then kinda forget about it, hoping that everything is going to be ok. In 2008, everyone in the U.S. learned that’s not a smart way to invest. But how many of us have changed?
How many of us truly are a conservative investor? You might be surprised…
To shed a little light on this investment philosophy, I looked up a few definitions that we’ll use as reference (The emphasis is mine):
A conservative investment is one which carries the greatest likelihood of preserving the purchasing power of one’s capital with the least amount of risk.
Investopedia.com puts it this way:
An investing strategy that seeks to preserve an investment portfolio‘s value by investing in lower risk securities such as fixed-income and money market securities, and often blue-chip or large-cap equities.
EHow.com says it like this:
A conservative investor is someone who wants his money to grow but does not want to risk his principal investment. Conservative investors choose financial products that do not fluctuate much in value. This is a wise investment strategy when the investment money is needed soon or when the economy is in the midst of a major downturn. However, conservative investors miss out on explosive growth during times of economic prosperity.
Do you agree with these definitions? I do. It makes sense: To truly be a Conservative Investor, people must protect and preserve their principal!! Better to be safe than sorry, right? Most of those articles are written with a stock/bond/mutual fund slant to them. Stocks and bonds are usually touted as ‘conservative’, and is usually what most people think is the safe/most conservative type of investment.
But is there another way? Investing in tangible assets can reduce risks that exist in the stock market, and that means your portfolio might just survive the next downturn. A great reason to learn more, right? In fact, investing in Trust Deeds can be far more transparent and conservative than stocks and mutual funds.
A Truly Conservative Investor
Some assets can protect and preserve capital much better than stocks and mutual funds. So look at it this way: real estate has tangible value. Gold, silver, cars, even Star Wars action figures from 1980 all have a tangible value. I have a share of Wendy’s stock that my aunt Karen got me when I turned sixteen – my first job – I think she paid $30. That share, now almost 30 years old is worth about $4 . I know that I could get more than 4 bucks for my Return of the Jedi action figures that are still in their boxes! Overly simple to be sure, but it’s also accurate because of the nature of the investment. The power of Assets: This is why I became a Private Lender, and why my Funding Partners invest in Trust Deeds, too!
Please understand, if your portfolio doesn’t have any tangible assets, your risk is higher. But guess what? NOW is the perfect time to TAKE ACTION and get some!
This understanding gives you new choices beyond the stock market. If you want to be a truly conservative investor, you should look outside of the stocks and bonds that make up most of your portfolio. Tangible assets give you another choice; A choice that significantly improves your power to preserve.
Answer this: The stock market will (inevitably) tumble again. How much more conservative will you feel once you’ve added just one or two more asset-backed investments into your arsenal?