What is a conservative portfolio and how should it be set up?
Find out what a conservative portfolio is and how to build yours
Announcements
When putting together a conservative portfolio, the investor seeks to keep the majority of their investments in safe assets, to preserve their capital.
In the financial market, there are basically three investor profiles: conservative, moderate and bold.
If you want to understand more about the subject, continue reading.
What is an investment portfolio?
An investment portfolio is a set of financial investments of an investor.
In other words, it is made up of the assets that the investor chose to make the money yield.
Building an investment portfolio can be a challenge. After all, this concept is extremely important for anyone who wants to start investing and, therefore, maximize their earnings.
The wallet is basically like a basket, where you put all the products you have purchased.
The main objective is to create a diversified and, obviously, profitable portfolio.
However, it is not enough to just diversify for the sake of diversifying. The idea, in this case, is to set up an investment strategy so that you increase your profits and minimize your risks.
Furthermore, it is also essential to consider your investor profile and set financial goals.
This way, you will be able to find investments that are most aligned with your profile and strategies.
What is an investor profile?
The investor profile is a characteristic that indicates your preferences, expectations and risk tolerance when investing.
Identifying your profile is essential before making any type of financial investment.
The category is generally defined according to your risk tolerance. In addition, other characteristics must be analyzed, such as your objectives, current financial situation and knowledge of the financial market.
Learn more about the three investor profiles:
• Conservative profile: The conservative investor prioritizes security when investing. The majority of his portfolio is made up of low-risk assets.
• Moderate profile: A mix of the characteristics of a conservative investor and a bold investor. He prioritizes security, but is willing to take certain risks in the long term. Therefore, in some situations, he chooses higher-risk investments.
• Bold profile: An investor who has a greater tolerance for financial market risks. This is usually someone with more experience and who knows how to deal with market volatility. In other words, they are willing to take certain risks, as long as there are good possibilities of profit.
How to build a conservative portfolio?
To build a conservative portfolio, that is, with low-risk assets, it is important to think about diversification.
Furthermore, although profitability is very important, there are other factors that must also be considered, such as:
Financial goals
So that your investment portfolio reflects your financial goals In the short, medium and long term, it is important to think about an appropriate diversification strategy.
For example, a portion of your portfolio may be more focused on short-term goals, such as building up your emergency fund or taking a trip in the next few months.
Therefore, in this case, the ideal is to prioritize the application with daily liquidity, so that you can withdraw the money when you need it.
Liquidity
In the world of investments, liquidity refers to the ability and ease of converting an asset into cash.
In highly liquid investments, it is possible to make redemptions easily.
Low liquidity investments are those in which the investor has difficulty or is unable to make the withdrawal before the due date.
Typically, low-liquidity assets are sought after by investors with a long-term focus.
Therefore, always take into account the liquidity of an investment before making a new investment.
Application deadline
The term determines the duration of the financial application.
When putting together an investment portfolio, it is important that you pay attention to this.
After all, as we said, with low liquidity assets, investors have more difficulty withdrawing money before the deadline.
To create a diversified conservative portfolio, you can invest in applications with different terms, according to your goals.
What are low risk investments?
In the financial market, there are certain lower risk investments.
For this reason, they are highly sought after by conservative investors. Learn more about these applications:
Treasury Direct
It is a program of the National Treasury created in 2002. It was developed in partnership with B3, for the sale of federal public securities to individuals.
Tesouro Direto is considered one of the safest and most accessible investments on the market.
The main types of government bonds are
• Prefixed Treasury
• Treasury Selic
• IPCA Treasury
CDB
The Bank Deposit Certificate (CDB) is a fixed income investment that is protected by the FGC.
When you invest in a CDB, you lend your money to the institution. On the maturity date of the bond, you receive the invested capital plus the combined yield.
These fixed income securities have three classification categories:
- Prefixed: profitability is known at the time of application.
- Post-fixed: the profitability of a post-fixed security is linked to an economic index, such as the CDI.
• Hybrid: It is a mixture of pre- and post-fixed. In other words, profitability is determined by the sum of a pre-fixed rate with a post-fixed rate.
Just like public Treasury Direct bonds, CDBS are taxed directly at source.
LCI and LCA
Real Estate Credit Letters (LCI) and Agribusiness Credit Letters (LCA) are fixed income securities exempt from income tax.
When you invest in an LCI, you are purchasing a security issued by an institution, linked to real estate credit.
As for LCAs, are titles that raise funds with a view to developing agribusiness.
Conclusion
Building a conservative and diversified portfolio is very important for investors who prioritize security when making investments.
However, before choosing a specific investment, analyze all the characteristics of the product, such as minimum investment amount, income tax and fees, liquidity, maturity date, among others.
