What is your purpose when starting to invest in Mutual Funds? Are you among those who invest to preserve wealth and keep it stable, or those who aim to grow wealth?
In investing, it is very important for investors to determine their goals, whether it is to maintain asset value (wealth preservation) or to grow assets (wealth growth).
By having clear goals, it becomes easier to determine the right type of investment instrument.
Therefore, this article will help you understand more deeply about the concept of wealth preservation and wealth growth, making it easier for you to choose the right investment instrument. Let’s take a closer look!
What Is Wealth Preservation?
To begin, it is best to first understand the concept of wealth preservation.
As the name suggests, this concept refers to a strategy carried out to protect the value of one’s assets from economic uncertainties so they remain safe and stable.
With its focus on maintaining value rather than chasing asset growth, this strategy is generally suitable for conservative investors or those approaching retirement age.
To achieve wealth preservation, several steps can be taken, such as portfolio diversification, using insurance, and choosing inflation-resistant instruments.
When discussing instruments with such characteristics, some suitable Mutual Fund products include Money Market Funds and Fixed Income Funds.
What Is Wealth Growth?
Switching from wealth preservation or wealth maintenance strategy, next is wealth growth. This term refers to a strategy aimed at increasing asset value or growing wealth with greater profit potential.
This sounds very appealing, and it is generally favored by aggressive investors with long-term horizons. With higher potential returns, you must also realize that the risks are equally significant.
Whereas wealth preservation prioritizes asset stability, the wealth growth strategy focuses on increasing asset value.
To pursue wealth growth, you still need to be cautious. Diversify assets to aim for higher returns.
Also, always study products before choosing them. If necessary, consult with experts to avoid choosing the wrong instrument.
As a consideration, several Mutual Fund products you can choose include Equity Funds or Mixed Funds.
How to Choose Mutual Funds According to Financial Goals
After understanding the concepts of wealth preservation and wealth growth, here are ways to choose the right Mutual Fund products according to your financial goals:
Determine Your Risk Profile
First, you need to know your risk profile as an investor. In short, risk profiles are divided into three: conservative, moderate, and aggressive.
- A conservative profile tends to play it safe and is often chosen by investors who want to maintain asset value stability. Suitable product choices include Fixed Income Funds or Money Market Funds.
- A moderate profile seeks balance between potential return and risk. A recommended product choice is Mixed Funds.
- An aggressive profile usually belongs to investors who want high returns and asset growth. If you have this profile, you can choose Equity Funds.
Match Your Investment Horizon
Next, you can consider based on the investment horizon or time frame. For financial goals focused on wealth preservation, you should choose short-term instruments such as Money Market Funds.
Meanwhile, if your goal is wealth growth to increase asset value, you are recommended to choose Equity Funds.
Diversification
You can also diversify or spread assets. By doing this, you can combine several types of Mutual Funds so your portfolio becomes more stable and balanced.
The added advantage of diversification is minimizing losses since you are not relying on just one instrument.
Regular Portfolio Evaluation
Finally, ensure you regularly evaluate your portfolio. This is important so that your investment results align with the financial goals you have set, whether for wealth preservation or wealth growth.
Strategy of Combining Wealth Preservation & Wealth Growth
Each person certainly has different financial goals. Some investors want to preserve their wealth, while others want to grow their assets.
However, as an investor, you do not necessarily have to choose only one of these categories. You can combine wealth preservation and wealth growth strategies.
By combining both, you can maintain balance while also enhancing potential returns.
For example, you can allocate part of your assets to Fixed Income Mutual Funds for stability, and another part to Equity Mutual Funds for growth.
DBS Treasures Priority Banking: A Trusted Partner to Begin Your Investment
From the discussion above, it is clear how important it is to determine financial goals before starting to invest. With clear goals, it becomes easier to choose instruments and set the right strategy.
This also applies when investing in Mutual Funds. The choice of products depends greatly on whether your goal is to preserve wealth or grow it.
When it comes to investing in Mutual Funds, one trusted partner recommended is DBS Treasures priority banking. With this partner, you will receive product recommendations tailored to your risk profile and financial goals.
In addition, your investments will be managed by professional Investment Managers with extensive experience in optimizing product performance.
In your investment journey, you need a partner who can support every important step. DBS Treasures priority banking stands as a trusted partner to help you achieve your financial goals.
Through priority banking services, DBS Treasures presents product recommendations aligned with your risk profile and manages your funds with professional Investment Managers.
The DBS digibank Application also makes it easier for you to conduct transactions — from buying, selling, and switching, to registering for SID (Single Investor Identification).
You will also be supported by curated market analysis from financial experts who will communicate it and provide the latest opportunities tailored to your risk profile and portfolio needs, powered by Artificial Intelligence/Machine Learning (AI-ML). These insights are complemented by curated solutions across investment (Grow) and insurance (Protect), enabling you to invest quickly and confidently through your preferred channel.
For those who wish to invest in Mutual Funds with DBS Treasures Priority Banking, you can access complete information by clicking here.
