Investing is a great way to reach your financial goals and increase the value of your money. It is also possible to achieve this with the assistance of a qualified adviser, who can help you to balance your financial situation and level of comfort with risk, balancing the need to increase your potential growth and the protection of your principal.
With the investment funds, your and the savings of other investors are pooled together. A fund manager buys the investments, holds them and then sells them on your behalf. The majority of funds are comprised of a mix of assets, which can help lower the risk of investing. However, some funds are more specialised than others, for example funds that focus on commodities or property. There are also multi-asset funds that may hold a mixture of various asset types, such as bonds and shares.
Certain funds are targeted towards specific regions or sectors such as emerging markets or green investment. Many funds have distinct investment objectives, for instance, the reduction of unsystematic risk or aiming for a certain degree of growth. Others have a common investment goal like low cost investing.
Your investment timeframe as well as your attitude to risk will determine the kind of unit trusts, OEICs, and investment trusts you select. For example, younger investors tend to be more comfortable with risks that are higher and may be more likely to choose funds with more equity-based investments. For those who are nearing retirement or have family commitments might prefer to take on less risk and choose a fund that has more bonds.