It is a great way to grow your funds and reach your long-term financial goals. It is also possible to do this with the assistance of a qualified adviser, who can help you to balance your financial situation and level of comfort with risk versus the need for some growth potential and the security of your principal.
Investment funds pool your savings with those of other investors. A fund manager buys, holds and sells investments on your behalf. The majority of funds consist of a mixture of assets, which helps reduce the risk of investing. Certain funds are more focused, such as those that concentrate on commodities or property. Multi-asset funds can hold various asset classes, including bonds and shares.
Certain funds are targeted towards a particular region or sector, for instance, emerging markets or green investment. Some also have a variety of investment goals for example, such as targeting specific growth levels or reducing risk that is not systemically controlled. Others have a more general goal, like low-cost investing.
The type of unit trusts, OEICs and investment trusts you select will depend on both the duration of your investment and your approach to risk. For instance, investors who are younger are more likely to accept risks that are higher and may be more likely to choose funds that have greater proportions of equity. However, those who are approaching retirement or with family obligations might prefer to take on less risk and select an investment with more bonds.