Conservative Profile? See the best strategies and investments

If you have a conservative profileIt's likely that your priority is to preserve your assets, avoiding big market swings and high risks.

In this context, finding the best strategies and investments can seem challenging, especially in an increasingly dynamic financial environment.

However, there are several options available that offer security, stability and gradual profitability, allowing you to achieve your short- and long-term financial goals without having to take unnecessary risks.

The financial market offers a variety of alternatives, but not all of them are suitable for those with a more cautious profile.

To ensure that your decisions are aligned with your expectations and needs, it is essential to know your risk profile well and understand how different investments can fit into your strategy.

What is a Conservative Profile?

O conservative profile is characterized by a greater aversion to risk. Investors with this profile generally prefer to keep the majority of their capital in low risk assets. fixed incomeSuch as government bonds and CDBs, which offer predictability and low risk.

The main motivation behind this behavior is security, i.e. the search for investments that offer less volatility, even if the return is more modest.

This profile is very common among investors who prioritize stability and wealth preservation, especially in scenarios of economic uncertainty.

According to Brazilian Association of Financial and Capital Market Entities (ANBIMA)42% of Brazilians who own investments identify themselves as conservative.

This shows that risk aversion is a predominant characteristic of most investors, especially in times of economic instability.

Conservative investors often value security more than significant returns, preferring to give up big gains in exchange for protecting their capital.

This behavior can be influenced by various factors, such as age, financial goals, experience in the financial market and even macroeconomic events that impact investor confidence.

However, this doesn't mean that conservatives can't pursue an asset growth strategy, only that this strategy must be carefully planned, with a focus on capital preservation.

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Investment strategies for this profile

Investing safely is the main priority of the conservative profile, but that doesn't mean that profitability should be neglected.

An effective strategy for this profile is to diversify the portfolio with low-risk, highly liquid investments, ensuring that capital is protected and available should the need arise.

Below we will discuss the main strategies that meet the needs of the conservative investor, providing both stability and adequate returns.

Central to any conservative strategy is intelligent diversification. By allocating resources to different types of low-risk assets, the investor ensures that they are not exposed to a single specific type of risk, such as the volatility of a certain sector or the fluctuation of a single currency.

In other words, it provides an extra layer of security, as the performance of one investment tends to offset the possible losses of another.

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Public Securities

Government bonds, such as Treasury Directare widely recognized as one of the best options for conservative investors.

O Selic Treasury, for example, is a bond that follows Brazil's basic interest rate and has daily liquidity, meaning that the investor can redeem the amount invested at any time without major losses.

In a scenario of rising interest rates, such as the one Brazil often faces, these bonds become even more attractive.

The IPCA+ Treasury, on the other hand, offers protection against inflation, ensuring that the investor's capital does not lose purchasing power over time.

This combination of security, liquidity and protection against inflation makes government bonds a solid choice for the conservative profile.

However, it is important for investors to understand that, even with low risk, government bonds are not exempt from short-term fluctuations, especially longer-term bonds such as the Prefixed Treasury or the IPCA+ Treasury.

These assets can fluctuate in price on the secondary market, although if the investor keeps the bond until maturity, he will receive exactly the amount agreed at the time of purchase, plus the accrued income.

Fixed income

Fixed income also includes other options, such as the Bank Certificates of Deposit (CDBs).

CDBs are issued by banks and function as a way for the investor to lend money to the bank in exchange for interest.

They generally offer yields linked to the CDI (Interbank Deposit Certificate), which is a rate close to the Selic rate.

The great attraction of CDBs, apart from the return, is the guarantee of the Credit Guarantee Fund (FGC)This protects investments of up to R$ 250,000 per individual taxpayer and per financial institution in the event of the bankruptcy of the issuing bank.

This way, conservative investors can invest with peace of mind, knowing that their capital is protected.

Private Pension

Another very popular option among conservatives is the private pension, which offers tax benefits and long-term planning.

Plans such as the PGBL (Free Benefit Generating Plan) allow tax deductions in Income Tax, while the VGBL (Free Benefit Generating Life) is more suitable for those who don't need the deductions, but are looking to supplement their income in retirement.

For the conservative profile, the ideal is to choose a pension plan based on fixed-income funds, which offer less volatility and controlled risks.

Investing in fixed income funds is also an excellent strategy for those looking for security and diversification.

These funds are made up of a basket of fixed-income assets, such as government bonds, CDBs and debentures.

The great attraction of fixed-income funds is the possibility of having a diversified portfolio with professional management, which seeks out the best investment opportunities within this market.

In addition, fixed-income funds offer the convenience of not having to follow the financial market on a daily basis, since they are managed by specialists.

The DI fundsThe savings accounts, which closely follow the economy's basic interest rate, are a classic choice for the conservative profile, offering slightly higher returns than savings accounts, but with similar security.

The main advantage of DI funds is that they have high liquidity, allowing the amount invested to be redeemed at any time, which is a highly desirable feature for investors who may need to access their funds quickly.

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Yield Comparison: Government Bonds and Fixed Income Funds

To illustrate the performance of these alternatives, take a look at the table below, which compares the estimated annual returns of government bonds and fixed-income funds:

Based on this table, it is clear that the conservative profile find options with competitive returns, without compromising on security.

The rates of return vary according to the risk and liquidity of the assets, but in all cases there is protection against large losses, which is essential for the conservative investor.

The role of diversification for the conservative profile

In addition to choosing the right investments, diversification is an essential aspect of a conservative profile.

Diversification means allocating capital to different asset classes, such as fixed income, investment funds and possibly a small percentage in variable income, such as shares in consolidated companies, in order to maximize growth potential without compromising security.

Although the conservative profile avoids shares due to their high volatility, there are ways of minimally exposing yourself to this market, with share funds linked to large companies in stable sectors, such as utilities (water, energy, sanitation), which have lower volatility and distribute good dividends.

Finally, diversification in fixed income is equally important. By distributing capital between government bonds, CDBs and fixed income funds, investors reduce their exposure to specific risks, such as the default of an issuing bank, and better protect themselves against possible market fluctuations.

Conclusion

Investors with conservative profile have at their disposal a wide range of investment alternatives that provide security and stable profitability.

Government bonds, CDBs, fixed-income funds and private pensions form the basis of a solid strategy for this profile, guaranteeing the preservation of assets and consistent returns.

The key to success lies in diversification, choosing the right products and maintaining a long-term vision.