Every investor pursues at least one of the following objectives:
- Capital appreciation
- To increase the long-term value of one’s wealth
- Income generation
- To generate current income
- Capital preservation
- To maintain the real value of one’s wealth
Investors who are focused on capital appreciation may assume growth risk by investing in stocks, while those going after capital preservation might only invest in ultra-safe assets like government bonds. Investors seeking income generation might land somewhere in the middle, investing in assets like corporate bonds, which bear higher interest rates than government bonds.
But what approach should investors take if they have more than one objective? There are three primary approaches that investors can take to achieve both objectives at the same time…
This post originally appeared at MoneyMiniBlog.