It is a great way to grow your funds and reach long-term financial goals. It’s also a strategy that can be accomplished with the assistance of professional advisers, helping to keep in mind the need for principal protection and some growth potential against your financial circumstances and comfort with the risk.
With the investment funds, your and the savings of other investors are put together. A fund manager buys the investments, holds them and then sells them on your behalf. Most funds are made up of a mix of assets, which helps reduce the risk of investing. Certain funds are more focused like those that concentrate on commodities or property. There are also multi-asset funds which could contain a mix of different types of assets such as bonds and shares.
Certain funds are targeted towards certain regions or sectors like emerging markets or green investments. They also have a variety use this link of specified investment aims for example, such as targeting specific levels of growth or reducing risk that is not systemically controlled. Others have a common investment goal like low cost investing.
The type of unit trusts, OEICs and investment trusts you choose will depend on the timeframe you invest in and your approach to risk. Younger investors may be more willing to accept a higher level of risk and thus choose funds that contain a higher proportion of stocks. For those who are nearing retirement or have family obligations may prefer to take an easier risk and select a fund that has more bonds.