CONSERVATIVE FUNDS։ WHAT ARE THEM AND WHAT YOU NEED TO KNOW ABOUT THEM?
Investment is an important element in financial planning. It is the way to organize funds and direct them towards wealth creation. It is important to realize your financial goals and decide the investments to achieve them in the long run.
Investments are also based on the risk appetite. So, if you are looking for consistent returns with very little risk, you are heading towards a conservative fund! There are several benefits associated with a conservative fund. Let us understand them in a little detail.
WHAT IS A CONSERVATIVE FUND?
A conservative fund saves in financial instruments to provide consistent returns. It is invested in two ways. Primarily, it is invested in fixed income securities or the debt funds such as bonds, money market instruments, government securities, etc. And secondly, it is invested in a combination of debt funds and equity funds.
WHO ARE THEY FOR?
Conservative funds are ideal for:
·People close to retirement
·New investors who want to start slow
·Anyone looking to protect their capital
·Investors with a low tolerance for risk
WHAT CAN YOU EXPECT IN RETURNS?
Because conservative funds play it safe, their returns are usually modest — typically higher than a savings account, but lower than aggressive stock-based funds.
You're trading high growth potential for lower volatility. In other words, you might not get rich quickly, but you're also less likely to lose sleep over your portfolio.
THINGS TO KEEP IN MIND
· Not risk-free: Conservative doesn't mean zero risk. Bonds can lose value if interest rates rise, and even the safest assets can carry some uncertainty. Even the safest investments have some risk.
· Inflation matters: If your fund only returns 2% but inflation is 3%, you’re technically losing purchasing power.
· Know your goal: These funds are best used as part of a bigger financial plan. They're not usually the best choice if you're investing for aggressive long-term growth (like a 25-year-old saving for retirement).
CONCLUSION
Conservative funds aren’t flashy, but they’re a solid choice for anyone who values stability over speed. Whether you’re approaching retirement or just want to play it safe, these funds help you grow your wealth — without riding the rollercoaster of the stock market.
As always, choose investments that match your goals, your timeline, and your comfort with risk. When in doubt, a trusted financial advisor can help guide the way.
HOW TO INVEST?
Open a free brokerage account with Unibank Invest and start investing. The Unibank Invest app provides access to the world’s largest stock exchanges, enabling you to purchase international investment instruments, such as stocks, bonds, and ETFs.