It is a great method to achieve your long-term financial goals and increase the value of your capital. It can also be done with the help of professional advisers, helping to balance the need for primary protection and potential growth against your financial situation and your comfort with the risk.
Investment funds pool your savings and the savings of other investors. A fund manager then buys or holds investments and sells them on your behalf. Most funds consist of an assortment of assets that reduces risk of investment. However, some are more specialized than others, like funds that are focused on property or commodities. Multi-asset funds could hold various types of assets, like shares and bonds.
Certain funds are geared toward certain regions or sectors such as emerging markets or green investment. Many also have a range of specific investment objectives, for instance, targeting specific growth rates or reducing risk that is not systemically controlled. Others have a more general aim, such as low-cost investing.
The type of unit trusts, OEICs and investment trusts you pick will depend on the length of your investment period and your approach to risk. Younger investors may prefer to take on a greater level of risk, and therefore choose funds that have a higher percentage of stocks. Alternatively, those approaching retirement or with family obligations might prefer to take a lower level of risk and choose an investment with more bonds.