Investment is a great strategy to meet your long-term financial objectives and grow your money. It can also be accomplished with the assistance of professional advisors to help you make sure you are balancing the need for principal protection and some potential growth against your financial circumstances and comfort with the risk.
With investment funds, your and other investors’ savings are pooled together. The fund manager will purchase, hold and sell investments on your behalf. Most funds are made up of a mixture of assets, which can help lower the risk of investing. However, some are more specific than others, for instance funds that focus on property or commodities. There are also multi-asset fund that could contain a mix of various asset types, including shares and bonds.
Some funds are geared toward specific regions or segments, such as green or emerging markets. A lot of funds have specific investment goals, such as cutting down on unsystematic risks, or aiming at a certain amount of growth. Others have a broad investment objective for example, low cost investing.
The type of unit trusts, OEICs and investment trusts you select will depend on both the length of your investment period and your risk tolerance. For instance, younger investors are generally more comfortable taking risks that are higher and may be more inclined to choose funds that have a larger proportion of equities. Alternatively, those who are approaching retirement or have family obligations may choose to take less risk and choose a fund that has more bonds.
