Investment is a great strategy to achieve your long-term financial goals and increase the value of your capital. It’s also something that can be done with the help of professional advisors, who can help you keep in mind the need for primary protection and potential for growth against your current financial situation and your ability to accept the risk.
Investment funds pool your savings with the savings of other investors. A fund manager buys or holds investments and sells them on your behalf. Most funds comprise various assets, which reduces investment risk. However, some are more focused than others, such as funds that concentrate on commodities or property. There are also multiasset funds that can hold a mix of different types of assets, such as bonds and shares.
Some funds are geared toward a specific region or sector, such as green investments or emerging markets. Many also have a range of specific investment objectives for example, such as targeting certain levels of growth or reducing risk that is unsystematic. Others have a more general investment focus, such as low-cost investing.
The type of unit trusts, OEICs and investment trusts you choose will depend on the length of your investment period and your risk tolerance. Younger investors may be more willing to take on a greater level of risk, and therefore choose funds that contain a higher proportion of stocks. For those who are nearing retirement or with family commitments might prefer to take on less risk and choose funds that have more bonds.