Investing is a great way to meet your long-term financial goals and increase the value of your savings. It’s a process that can be done with the assistance of professional advisors, who can help you keep in mind the need for principal protection and some potential for growth against your current financial situation and confidence in risk.
Investment funds pool your savings with the savings of other investors. A fund manager will buy, hold and then sell investments on your behalf. The majority of funds are comprised of a variety of assets, which can help to reduce risk associated with investing. However, some funds are more focused than others, for instance funds that are focused on property or commodities. Multi-asset funds could hold several asset classes, such as bonds and shares.
Certain funds are focused on specific regions or sectors like emerging markets or green investment. Many funds have objectives for investment, such as cutting down on unsystematic risks, or aiming for a certain degree of growth. Others have a more general investment aim, such as low-cost investing.
The type of unit trusts, OEICs and investment trusts you pick will depend on both the timeframe you invest in and your risk tolerance. Younger investors may be more willing to take on a higher level of risk and therefore choose funds with a greater percentage of stocks. However, those approaching retirement or have family obligations may choose to take a lower level of risk and select a fund that has more bonds.