What is a common characteristic of conservative investments?

Conservative investments primarily focus on preserving capital and minimizing risk, which is why stability and lower risk are their defining characteristics. These investments, such as government bonds, high-grade corporate bonds, and certain mutual funds, are designed to provide a steady, albeit modest, return over time while avoiding the fluctuations that can come with more aggressive investment choices.

The goal is to safeguard the principal amount invested, making them suitable for individuals who may have a low tolerance for risk, such as those nearing retirement or anyone who prefers a more cautious approach to building wealth. As a result, the appeal of conservative investments lies in their ability to weather market changes without significant losses, ensuring a level of security for the investor's funds. This stability is a key aspect that differentiates conservative investments from more volatile options.