Jul 20, 2022

Unsafe Times, Safe Investments: Investment Options for the Cautious Investor

— Financial goals are set. You are geared to start your journey to financial freedom. Pause. You find out your money might be at risk. Now that you have identified your risk appetite, here are some relatively low-risk investments for the cautious investor.

3 minutes

By ODP

Imagine this, you’ve got a major exam tomorrow, would you opt for a night out with friends, or an all-night study session? In weighing your options, would you consider how prepared you are for the exam, and how important the exam is towards getting your degree or certification?


The options you are presented with are, a) the choice of zero risk, b) minimum risk, and c) maximum risk.


This is exactly how investments mirror real life because you get to determine how much risk you are willing to take on to achieve your ultimate financial goal. The path to financial freedom is subjective and tailored to your specific goals, capital, and risk appetite.


Exploring Your Risk Appetite



With investments, the risks to be weighed are in terms of principal and interest – what percentage of your investment capital/interest are you willing to lose, if at all?


There are essentially 3 levels of risk in investment:


High-Risk Investment: These investments offer high returns but with an equally high risk of loss of capital and/or profit.


Low-Risk Investment: These investments offer low/average returns but with a minimum risk of loss of capital and/or profit. The concept of low risk could mean either zero risk of losing your principal or incurring a minuscule loss over time.


*Risk-Neutral: For the risk-neutral investor, the risk is not an imminent concern in making investment choices.



Safe Investments

Financial goals are set. You are geared to start your journey to financial freedom. Pause. You find out your money might be at risk. Now that you have identified your risk appetite, here are some relatively low-risk investments for the cautious investor.


Money Market Fund



The GDL Money Market Fund (MMF) is a mutual fund, regulated by the Securities and Exchange Commission, which offers diversified, short-term investments at an interest rate relatively higher than your regular bank.


Simply put, MMF is a pool of funds that are then put into various investment options, such as Treasury Bills, Commercials Papers, Banker’s Acceptance, and more, handled by expert asset managers.


MMF is a perfect fit for the cautious investor for the following reasons:

- Low principal needed (a minimum of N10,000)

- No entry or exit charges

- Low risk

- Diversified investments

- Short-term investment period

- High liquidity



High Yield Notes

Although High Yield Notes are not entirely risk-free, they are still a safe option for the cautious investor.


In High Yield Notes (or bonds) investments, investors are essentially lending money to a company, which in turn, makes a legal commitment to pay a relatively high-interest rate. The major risks in this type of investment are the fluctuation of interest rates and the risk of defaulting – where the company fails to pay the interest.


The best way to mitigate default risk is to invest in high-quality bonds from reputable companies, with a good financial history, or invest in a diversified pool of corporate bonds. With the GDL High Yield Note, you can rest easy knowing that our expert asset managers have analyzed these bonds to minimize risks to the highest level.


These are some of the features of GDL High Yield Note:

- Higher yield than a traditional savings account

- A minimum deposit of N100,000

- Zero maintenance or transfer charge

- Upfront or upon maturity interest payment


Which of these low-risk investment options do you prefer? Click here to get started on the safest route to financial freedom.

Read these next ...

Types of Investors Based on Risk Appetite
Risk Appetite is the amount of uncertainty that an investor is willing or able to take in the pursuit of financial gain. It is important to know your risk appetite and invest with it in mind to avoid a constant rise in your blood pressure levels.
3 minutes

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