No matter what type of Stock Market Investing you are involved in, equity is inevitable in your investment portfolio. It could be that you are risk averse, or perhaps you are at that age in life where you don’t need to pick up risk, but equity is still important due to one reason alone: It beats inflation and the returns equity fetches over the long term are unbeatable.
Minimise Risk With A Protected Equity Strategy
But then, equity is risky too. How do you ensure that you are able to tap into equity but avoid the downside risk associated with it? Is there is a way to protect your investment portfolio? The resounding answer is yes, but at a cost.
One of the best ways to do this is to follow a Protected Equity strategy, that is to take a Protected Equity loan that is loaned out to you to allow you to make investments into equity related investments.
The best part is that you don’t have to bear any losses by paying up anything over and above the loan principal and the exorbitant rate of Interest (which is the cost we were talking about) in case the value of the equity investments you purchased diminishes due to market fluctuations.
Analyze Before Investing
When investing in a Protected Equity Strategy, the high cost of the interest is a large point of concern, and this is where your scrutiny is vital. It is important that you put things down on paper and perform a thorough analysis to see if the particular investment you are about to get into is profitable. Of course, don’t get struck by “paralysis by analysis” on the other extreme.
Andrew Dimitri from Planet Wealth Explains The Protected Equity Strategy…
Written By
Scotty Smith
Investing The Stock Market