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Capital preservation

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Capital preservation. Capital preservation is a strategy for protecting the money you have available to invest by choosing insured accounts or fixed-income investments that promise return of principal.

The downside of capital preservation over the long term is that by avoiding the potential risks of equity investing, you exposure yourself to inflation risk.

That's the case because your investments are unlikely to increase enough in value to offset the gradual loss of purchasing power that's a result of even moderate inflation.



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60%, Nationwide Financial has begun offering owners of certain of its variable annuities Capital Preservation Plus Lifetime income, which guarantees return of principal during the accumulation/preservation period, and then withdrawals for life.
Its risk-averse, capital preservation philosophy weathered the 2000-2002 bear market with a positive return.
In considering which types of investments constitute capital preservation investments, companies should keep in mind the SEC's position that each capital preservation investment must present limited credit risk.
 
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