What is Conservative Investing?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 22 January 2020
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Conservative investing is a type of investment strategy that focuses on the acquisition of various types of investments that offer reasonable returns without carrying a great deal of risk. Typically, an investor utilizing this approach will focus on securities and other investments that carry a low to moderate amount of risk and have a proven track record of generating consistent, although not necessarily spectacular, returns. Often, investments of this type offer the comfort of being relatively impervious to shifts in the marketplace, and tend to perform at close to the same levels even during economic downturns.

The ultimate goal of conservative investing is the creation of a portfolio that is extremely stable in just about any type of economy. People who invest primarily as a means to create a nest egg for retirement often choose to go with this type of investment strategy. In like manner, investors who have a specific goal in mind, such as purchasing a home in the next five years, may choose to concentrate on a combination of investments that earn a consistent return with little volatility involved. Doing so makes it possible to generate the funds needed to meet the goal within the defined time frame, with few worries about financial reversals or setbacks.


Since conservative investing runs the gamut from extremely cautious to willing to accept a certain amount of risk, there are a number of investment options that even a conservative investor can consider. The most cautious of investors may choose to stay away from certain markets and focus attention on options that are almost guaranteed to earn some sort of return. For example, the investor may consider the stock market too risky for his or her taste, but feel that the risk associated with bond issues is within reason. As a result, the investor is likely to augment safe investments like savings accounts and certificates of deposit with a few government or municipal bonds.

At other times, conservative investing efforts may include the purchase of shares of stock, provided those shares are associated with companies with a solid history of performing well in various economic climates. To this end, the investor will often look closely at the stock prices over the last several years, relating any upward or downward shifts with any relevant events. If the stock in question continued to generate returns even when adverse conditions existed, there is a good chance the investor will consider the risk to be minimal and add that option to his or her portfolio. While not an aggressive investing strategy, conservative investing does make it possible for people to participate in various markets and earn some type of return without experiencing a great deal of worry or discomfort.



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