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A secure funding usually refers to an choice that’s thought-about to have a low degree of danger in comparison with different funding alternatives. Whereas there is no such thing as a fully risk-free funding, a secure funding goals to protect capital and supply a steady return over time.
A few of the widespread traits that outline a secure funding are as follows.
- Capital preservation: Protected investments prioritize defending the preliminary funding quantity. The danger of shedding cash is minimal or comparatively low.
- Low volatility: Protected investments are likely to have comparatively steady and predictable returns with out important fluctuations in worth. They goal to keep away from massive and sudden value swings.
- Liquidity: Protected investments typically provide excessive liquidity, which means they are often simply purchased or bought with out inflicting a big impression on their worth. This enables buyers to entry their funds rapidly if wanted.
- Regular revenue: Protected investments steadily generate constant cash move, similar to curiosity funds, dividends or rental revenue. This revenue stream provides to the general stability of the funding.
- Authorities-backed or excessive credit score high quality: Protected investments might embrace authorities bonds or extremely rated company bonds — that are thought-about to have low default danger. These investments are backed by the monetary power and stability of governments or respected organizations.