Capital Preservation
Definition
An investment strategy focused on keeping your money safe rather than growing it aggressively. Prioritizes not losing money over maximizing returns. Common in bonds, cash, and conservative portfolios for people near or in retirement.
Why It Matters
After you've built wealth, preserving it becomes more important than growing it. Losing half your wealth to recover it again means doubling it, which takes years. Capital preservation lets you sleep at night.
Example
A 65-year-old has $1 million. A 7% gain equals $70,000. But a 20% loss equals $200,000 gone. To recover, they need 25% returns (much harder). Instead, they shift to capital preservation: safer 3-4% returns with minimal loss risk.