et’s introduce you to two friends; Ahmed and Rashid. They’ve been friends for a long time, despite being quite different in nature.
Ahmed is a serial entrepreneur with a few trendy businesses under his belt. Some have thrived, and others failed spectacularly. That doesn’t stop him looking for the next great opportunity, though. Always up for an adventure, Ahmed is the first one to book his ticket for anything involving an adrenaline rush and a splash of danger. It’s probably no surprise that Ahmed is a bit of a petrolhead, and his pride and joy is a lava orange Porsche 911.
Rashid has worked as a Compliance Officer since he graduated and is focused on building his skills and developing his career. On holidays, Rashid can normally be found holding everyone’s stuff while they ride a rollercoaster or memorising the fire escape plan for the hotel. Rashid saved for a long time to put down a healthy deposit on his wheels of choice - his trusty, silver Toyota Camry.
You probably have an idea of where this is going, right?
If we compare the friends in terms of their respective propensity for risk, it’s clear that Ahmed is a comfortable with a high level of uncertainty and risk. He’s happy with taking more chances, actively pursuing opportunities for rewards and thrills.
Rashid, on the other hand, is more tempered and prefers to err on the side of caution. A sense of security and stability is important to him. Rashid’s aversion to risk is a personality trait that's going to shape the way he invests.
Many believe that you need to be a risk-taker like Ahmed to be an investor. But that’s not entirely true. Yes, a certain level of risk should be expected, but there are investment opportunities for those who are more risk-averse, and as you may know by now, we’re in the business of uncovering investment opportunities.
So, if you’re more of a ‘Rashid’, less keen on high risk, but still eager to invest, read on. We outline investment strategies more suitable for the risk-averse and look at 5 specific opportunities to get you going.
Ideal investment strategies for the risk-averse investor
It should go without saying – even though we do say it often – any investment has a level of risk involved. For those with a conservative risk appetite, the best approach is to stick to an investment strategy that focuses on preserving capital and minimising potential for loss. Fortunately, there’re a couple of options here.
Investing for income
Investing in stocks that offer opportunities for passive income, for example, through dividends. This provides the potential for periodic payouts of a share of profit, over and above any growth returns.
Diversification involves building an investment portfolio that includes a range of different types of stocks in terms of industry, sector, or country. A broader, more diversified portfolio mitigates risk as you aren’t relying on a single stock, individual industry or country as your only means of return.
Invest in stability
While aggressive investors look to chase volatility in the market, a risk-averse investor would want to avoid nascent industries and newer businesses, favouring companies and funds with established track records of stability and performance.
Investment opportunities on Nemo for conservative investors
Following the suggested strategies above, there are a number of Nemo nemes that fit the criteria for a more conservative investor.
Not been here before? Wondering what a neme is? A neme is a collection of stocks, themed by industry, topics, interests or country. Curated by advanced AI and our expert financial market analysts, the concept is to discover and deliver investment opportunities, so that you never miss out.
Livin’ on Dividends
Dividend stocks are a great way to add the possibility of income to your investment portfolio. And the stocks curated in our Livin’ on Dividends neme are known as the dividend kings. These companies have increased their dividend payout for at least 50 consecutive years. Yes, years. 50 of them. In a row. That’s a fairly solid track record, wouldn’t you say?
Explore the stocks and funds in Livin’ on Dividends neme.
ETFs – that's short for Exchange Traded Funds - are baskets of companies that you can invest in like a single stock. ETFs are typically managed by financial firms so you’re investing in the firm’s fund. The fund owns the underlying assets, but you own the a share of the fund. So, instead of investing in a long list of companies, you can diversify your portfolio with a single tap. And as a risk-averse investor, diversity is your friend.
Check out the funds in the Popular ETFs neme.
Diversity and potential income rolled into one! Now that’s what you call a risk-averse investor's dream combo. These ETFs offer diversification through indices investment as well as the potential of periodic dividend payments.
See all opportunities in the Dividend ETFs neme.
Stocks With Consistent Earnings
Companies with consistent finances, pricing power over competitors, and products that people buy in tough times are good options. If you're looking for stable and consistent stocks to invest in, any of these stocks listed here are great options.
Check out the Consistent Earnings neme.
Low Volatility Stocks
A stock’s volatility can be measured against the broader stock market. This statistical measurement is known as a beta level. The Low Volatility Stocks neme is comprised of stocks that have very low beta levels and experience less extreme fluctuations when compared to the broader market.
Discover Low Volatility Stocks neme.
Starter Stocks (Top Stocks for Beginners)
Nemo’s Top Stocks for Beginners neme pulls together some of the most popular stocks of well-known, large and established companies. Think Microsoft, Meta (Facebook and Instagram), Google, Apple, Amazon, Visa, and more. Based on market tenure, reputation and performance these entrenched brands may be considered lower risk than newer, smaller or unknown businesses.
See the Top Stocks for Beginners neme.
A drop-off in economic activity can result in big drops in stock prices as company revenues and profits decline during a recession. For a risk-averse investor, it would be prudent to include stocks of businesses that have proven to be resilient and robust during times of economic downturn. Typically, these will include companies that offer essential products and services that can’t be done without, even during times of financial pinch.
Review the Recession Proofers neme.
Slow and steady is a valid strategy
Investing isn’t a racing track. You don’t need a supercar. And you certainly don’t need to be an ‘Ahmed’ to succeed, either. For a more conservative investor, the trip may not be as fast or as furious, but there are investment opportunities that may be lower in risk and will still get you to the finish line.
If you’re ready to start your investing journey, sign up for Nemo today, and we’ll make sure you’ll never miss an investment opportunity.