Preservation of Capital: Strategies, Risks, and Drawbacks
Key Takeaways
- Preservation of capital aims to protect investment principal and prevent portfolio losses.
- This strategy often involves low-risk investments like U.S. Treasury bills and certificates of deposit.
- Retirees prioritize capital preservation to ensure they don’t outlive their savings.
- Capital preservation strategies might not keep pace with inflation, eroding purchasing power over time.
- Inflation-adjusted investments, like Treasury Inflation-Protected Securities, can help counteract inflation’s impact.
What Is Preservation of Capital?
Preservation of capital is a conservative investment strategy focused on protecting principal and avoiding losses. It usually involves low-risk investments like Treasury bills and certificates…
