Article Treasure Cove

Let’s discuss some details of investment activity in your financial planning. If you have conservative views then naturally you are interested in getting a certain guarantee from the institution promising you benefits from your investment activity. In fact I respect people with conservative views.

Can these companies give you a true guarantee? So, some companies can give you this guarantee but others can not do this. For example, insurance companies guarantee their clients a small profit. Here I will try to answer this question and show you how to invest clients’ money to those companies that provide guarantees to their customers.

So, what is the investment strategy that guarantees a wholly-owned preservation of invested capital? I should day that in this case much depends on you. First of all, before starting your investment activity you should clearly define how long you are going to invest money. Let’s take 5 years for example. What tools should you use to invest money to ensure the safety of capital? These are exactly those tools that always give investors income regardless of fluctuations in the market. I’m talking about bonds and bank deposits or in other words certificates. But do not forget about the reliability of the bond issue! If you invest in bonds issued by the Government of the Republic of the Congo, or invest money in the bank with a rating of DD then nobody can give you even a slight resemblance of guarantee.

So, I suppose you have decided to invest 100 000$ for 5 years, excluding for the risk of capital losses. Perhaps you really have such funds. To do this, the bulk of capital should be invested in bonds. Of course in this case zero-coupons are preferable because they can give you an opportunity not to bother with reinvesting coupon payments with the maturity of 5 years. This is the most important condition to buy bonds with maturities equal to the period of investment. If, for example, zero-coupon government bonds are sold at 80$ 1 bond and the nominal value of these bonds 100$ you need to buy bonds in the amount of 80 000$. This investment is a guarantee of preservation of your funds, as these 80 000$ after 5 years will be 100 000$. But these remaining 20 000$ can be invested anywhere and with any degree of risk. The main thing is that the bulk of your capital won’t be endangered. But you can slightly increase your risk and invest in the bonds of such an amount, which can allow you to return not 100% but, for example, 90% of the capital. In this case, the amount to be invested in more risky instruments, will rise to 28 000$. As you can see your final decision is very important. Good luck with your investment activity.

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