How Conservative Investors Build Wealth

Richard Montana | April 7, 2022

Do you like to think of yourself as a cautious, conservative investor? If so, you’re like many other working adults who prefer to be careful with their capital. For those whose main goal is to build long-term wealth, it can be smart to focus on a particular type of asset. That means possibly adding things like blue chip stocks and real estate to your portfolio.

No matter how many years away from retirement you are, there are concrete steps that can help boost not only the eventual size of a nest egg, but the opportunity of earning excellent returns on your money year after year. In addition to blue chips and real estate, conservative investing sometimes revolves around assets like index funds, which minimize market volatility and let you own a stake in the most stable securities. Other tactics include developing an automated savings plan and getting professional help with long-term financial planning. If you want to navigate a turbulent market but continue to enhance the value of your portfolio, the following suggestions can offer some ways to consider before you get started.

Blue Chip Corporate Stocks

Blue chip stocks aren’t for scalpers, day traders, or swing trading enthusiasts. They’re for serious long-term investors who want to try and maximize their wealth over one or more decades of accumulation and portfolio building. The stocks represent the oldest, most successful, and most stable corporations listed on the major exchanges. Millions of individuals, institutions, and businesses hold significant portions of their portfolios in blue chip shares.

Real Estate

Investing in rental homes has been one of the central techniques used by careful investors for more than a century. In the digital age, it’s easier than ever to do most of all of your investing online, place real estate shares into your self-directed IRA, and gain access to multiple benefits, like property appreciation and a continuous flow of rental income. Among the many advantages of real estate investing are reduction of taxable income due to the nature of real estate shares as pass-through income. That means individuals, as well as some corporate and business entities, can leverage the power of income reduction to try and bolster the returns on the bottom-line.

Index Funds

Index funds offer automatic diversification to people who are reluctant to put their capital into individual corporate shares. Owning a single share of an index fund gives the holder exposure to hundreds of stocks at once. Volatility is not a high risk with the indices except in times of extreme financial stress, like a major recession or depression.

Automated Savings

Building wealth isn’t only about investing in the markets. There’s also a savings component to the most successful portfolios, and that means cash in the bank. Often earning little to no interest, savings accounts are a necessary portion of any well-rounded financial plan. Some may consider making their cash savings deposits automatically through a payroll savings plan or a bank app that instantly moves a fixed amount of direct deposits into a designated savings account. It’s common to use a percentage of paychecks instead of a dollar amount in a payroll plan. Typically, working people opt to save between three and fifteen percent of their regular income according to reports.