Which investment strategy focuses on minimizing risks while maintaining principal value?

The investment strategy that focuses on minimizing risks while maintaining principal value is capital preservation. This approach is particularly important for investors who prioritize the safety of their principal investment, often seeking low-risk options that aim to protect the original investment even in volatile markets. Typically, capital preservation strategies involve investing in instruments such as cash equivalents, high-quality bonds, or other fixed-income securities that have a lower risk of loss compared to equities.

In a capital preservation strategy, the primary goal is to ensure that the investor does not experience significant losses. This is often aligned with the objectives of conservative investors, such as retirees or those nearing retirement, who may be more risk-averse and require their investments to sustain their current value or grow at a minimal rate rather than seeking high returns that come with higher risks. Thus, the focus remains on safely maintaining the investment's value, rather than on aggressive growth or income generation.

Other strategies, like growth investing, focus primarily on increasing the value of investments over time, accepting the inherent risks associated with that pursuit. Similarly, value investing seeks to capitalize on undervalued stocks, potentially exposing the investor to market risks. Income investing emphasizes generating regular income from investments, often through dividends or interest, which can also come with risks related to the