Investing – What You Need to Know

The investment process is a great way to achieve your long-term financial objectives and grow your capital. It can also be done with the help of professional advisors to help you balance the need for principal protection and some potential growth against your financial situation and your comfort with the risk.

With investment funds, your as well as other investors’ savings are pooled together. The fund manager then buys, holds and sells investments on your behalf. Most funds are made up of a mixture of assets, which helps reduce the risk of investing. However, some funds are more specialized than others, such as funds that concentrate on commodities or property. Multi-asset funds could hold an array of different asset classes, such as bonds and shares.

Some funds are geared towards a specific region or sector like green investments or emerging markets. A lot of funds have specific goals for investing, like reducing unsystematic risks or aiming to achieve a certain level of growth. Others have a broad investment objective, such as low cost investing.

The type of unit trusts OEICs and investment trusts you choose to use will depend on both the duration of your investment and your risk tolerance. For instance, younger investors are typically more comfortable taking risks that are higher and are likely to choose funds with a larger proportion of equities. Alternatively, those approaching retirement or with family commitments may prefer to take less risk and opt for funds that have more bonds.

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