It is a great way to grow your funds and reach long-term financial goals. It’s a process that can be accomplished with the assistance of professional advisors to help you balance the need for primary protection and potential for growth against your current financial circumstances and comfort with the risk.
With investment funds, your as well as the savings of other investors are put together. A fund manager then buys or holds investments and sells them on your behalf. Most funds consist of a mixture of assets which reduces investment risk. Certain funds are more focused for instance, like those that concentrate on commodities or property. There are also multi-asset funds that could contain a mix of various asset types, such as bonds and shares.
Certain funds are geared towards certain regions or sectors like emerging markets or green investments. Many funds have distinct investment objectives, for instance, decreasing unsystematic risks or striving at a certain amount of growth. Others have a more general investment objective, for instance, low-cost investing.
The kind of unit trusts, OEICs and investment trusts you choose to use will depend on both your investment timeframe and your approach to risk. Younger investors might be more willing to take on a greater level of risk, and therefore, pick funds that include a higher proportion of stocks. For those who are nearing retirement or with family obligations might prefer to take a lower level of risk and select a fund with more bonds.