The investment process is a great way to reach your financial objectives and grow your wealth. It’s also something that can be done in conjunction with the assistance of professional advisors to help you 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 other investors’ savings are pooled together. A fund manager will then purchase, hold and sell investments on your behalf. The majority of funds are comprised of a mix of assets, which helps to reduce risk associated more with investing. Some funds are more specialised in nature, for instance, those that concentrate on property or commodities. Multi-asset fund can contain an array of different asset classes, including shares and bonds.
Certain funds are targeted towards particular regions or sectors like emerging markets or green investments. They also have a variety of specified investment aims, for instance, targeting certain levels of growth or reducing risks that are not systemic. Others have a more general goal, like low-cost investing.
The type of unit trusts OEICs and investment trusts you choose to use will depend on the timeframe you invest in and your risk tolerance. For example, younger investors are typically more comfortable taking a higher level of risk and are likely to choose funds that have an increased proportion of equity. However, those who are approaching retirement or who have family commitments might want to take on less risk and select a fund with more bonds.