Do not want to take a lot of risks in your investment cycles? If you said yes, that means you are risk-averse. A risk-averse investor couldn’t afford to lose any money in the process of earning more, and that is completely understandable. Irrespective of where the market does stand, you would be more focused on safeguarding your money – which means the principal amount.
Since your priority is this, you would most often not want to choose any risks down the road, so for the ones who do not want to lose any of the money – do not lose heart, there are so many ways you can do that, and we talk about it here. But, before that – let’s brush up on the foundation of this topic.
Who is a Risk-Averse Investor?
Risk-averse means the investor who chooses the preservation of capital over the potential of a higher than average return. While investing – the risk equals price volatility. A volatile investment could make you richer or also devour your savings. A conservative investment would grow slowly and steadily over time.
Ways a Risk-Averse can Invest.
1. Fixed Deposit is a Great Choice
Fixed deposits do not just mean sitting money, you see. They earn you a handsome amount of interest on your invested amount without facing any risks. You can look up Bajaj finance fixed deposit interest rates, SBI, and so many more banks and NBFCs. FDs do not have any risks – they do not fluctuate according to the external markets; you will always be given what you were promised when you applied for an FD account.
2. Give High-Interest Savings Accounts a Try
There are a few banks that will give you an attractive interest rate on their savings accounts; you can find them and utilize them. Some of these banks right now are SBI, PNB, HDFC, ICICI, Bandhan, RBL, Ujjivan, and AU Small Finance Bank (you do have to remember that these interest rates are time-sensitive, and at different times you would see different banks giving out higher rates – make sure you stay on the constant lookout). You can always consider parking a portion of your money in any of these banks’ savings accounts – but also, do not forget about the minimum balance you would have to maintain.
3. Utilize the Markets’ Short Term Bond-Funds
Debt funds can be great for you; they can be an alternative for the investors that do not want to invest in FDs. A debt fund is more tax-efficient than a fixed deposit. They also carry along with the potential of better returns. Here there are the chances of interest rate hikes in the future; investors would invest in short-term bond funds. The long-term funds will have exposure to bonds of long-duration maturities, but that would not be the case with short-term debt funds – they carry a lower interest rate risk.
4. Dip a Tip in the Large Pool of Equities Out there
You might be thinking that the market of equities is highly volatile, and it could be risky for you to take a dive into it. But, do you know what the honest response would be? It would be, “do not give up a chance of earning high returns.” Just to avoid losses, you cannot miss out on this shore. But, if losses are your only problem, then there is a solution to that. You can choose to invest in some top-rated liquid funds. In this way, you would be able to make sure that a higher degree of safety is added to your investment, and you also are investing in a tool of greater returns.
5. Go for the Long Run in Equity Mutual Funds
When you choose to invest a lump sum amount, you may want to park the corpus in a liquid share and wait patiently for the downward correction in the market to gradually stagger step by step. When there is a major fall in the market, you could shift a fixed ratio of liquid fund corpus to the selected equity fund.
Securities that a Risk-Averse Investor can Invest in
Every investor wants to invest in the stock market; we all know the kind of returns we would be drawing from there.
While most of the investors want high returns, you might think there is not quite much for the ones that are concerned with the level of risks here. However, there are quite a number of tools that you can invest in, and they are mentioned here for you.
- Government Securities
- Corporate and Municipal Bonds
- Preferred Stocks
You could be risk-averse now, but the cycle starts here. When you start investing and growing your wealth – there will come turns to when you would be ready to take some risks (or you can afford to take some risks) that offer you a high return. But, if you have a low risk-appetite right now, you do not have to worry about it – you can get started in no time with this wide set of options for you.