Cosmin Panait is an investor who knows how complicated the landscape can look from the outside. It’s not just the endless options staring you down; it’s also the question of when to implement specific strategies and when to abandon ship. As the name would imply, safeguard investments are intended to keep investors protected from loss. He discusses how these investments work and who they’re suitable for.
You can think of safeguards as any investment that gives your portfolio security. While there is no such thing as a sure-fire bet, it is possible to get pretty close. For instance, let’s say that you take out a small share in a real estate investment trust. This trust will only ever rent to big commercial businesses, like Whole Foods or CVS. The returns might not be huge, but the odds of the business being late on rent or vacating the buildings are very low.
Cosmin Panait knows that things like government bonds and money market funds aren’t exciting, but they do provide some degree of protection to your other assets. Whether it’s a massive global recession or a one-off crash of a single stock, safeguard investments can be the buoy that keeps your portfolio afloat when the chips are down.
Safeguard investments are meant for everyone, even people who would rather risk it all than play it safe. No matter how risky people want to be with their money (and how much that hunger pushes them to succeed), a fallback portfolio can be handy. However, these investments are most recommended to people getting closer to retirement. Cosmin Panait says that people getting closer to their Golden Years will have to be smart when guarding against market volatility in the future. Since you can’t know what bread or eggs will cost five years into your retirement, having more than you think you need is important, so there’s no chance of running into financial trouble.
The other major group that can benefit from safeguards (besides the risk-averse) are those with a very short-term goal. If you want to finance a child’s education or come up with a down payment on a house, you can invest at least some of your money in these investments. The caveat is that you might not make as much as you think, so you would need to find an investment that was both liquid and boasted acceptable margins. It’s not always easy to find that kind of perfect combo.
Panait knows that relationship to risk is personal for everyone he works with. Some people will want to keep their money where they can see it, while others will gamble until they have nothing left. Something is to be said for betting (and winning) big, but this isn’t possible for everyone. Safeguard investments are a way to keep you out of hot water so you can stay in the game a little longer.