What makes a low-risk financial management？
Let's talk about how to invest in 2022 against the backdrop of interest rate hikes, and what exactly is considered low-risk.
1. First of all, to clarify a point: no financial management is completely and utterly risk-free. Even if you don't invest anything, just take the cash, it will be affected by the exchange rate and inflation, so there is no absolute safety of money in the world.
2.Low-risk finance means, first of all, robustness in terms of legal protection. For example, if you deposit money in a bank, there is deposit insurance, and even if the bank fails, the deposit insurance covers your losses. This is safety on the legal level.
Another example is that the U.S. Investor Protection Plan protects against losses up to $500,000 in the event of a brokerage firm failure, and the Hong Kong Investor Protection Plan protects against losses up to $500,000 Hong Kong dollars. These are all legal levels of security.
3. For low-risk financial management, you also need to see if the underlying assets are safe. For example, if you buy $Fullerton SGD Cash Fund (SG9999005961.MF)$, you can see through the information in its analysis page, that the underlying assets are almost all cash, and that underlying assets determine that the product is extremely safe. If you buy a bond fund whose underlying assets are all real estate company bonds, then the underlying assets are of course high risk. Many investors suffer losses because they invest randomly without looking at the underlying assets at all.
4. It is not advisable to hold a complete position in cash and deposits. Although this is a high interest rate environment, it is not advisable to hold a complete position in cash. The safest approach is still to allocate a portion to stocks. For example, it is good to use part of your money to hold a position in $SPDR S&P 500 ETF (SPY.US)$ $Vanguard S&P 500 ETF (VOO.US)$ $Vanguard Total World Stock ETF (VT.US)$.
Always remember that a diversified allocation of assets is truly prudent.
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ReadyGo : good takeaways for me
fearless jamil : the bank collapsing it means the whole system will fail