Investing – What You Need to Know
Investments can be a great way to grow your money and meet your long-term financial goals. It is also possible to achieve this with the help of a professional advisor, who can help you balance your financial situation and your level of comfort with risk versus the need for some growth potential and the security of your principal.
With investments, your and the savings of other investors are pooled together. A fund manager will buy, hold and sell investments on your behalf. Most funds comprise an assortment of assets that reduces risk of investment. However, some are more specific than others, for instance funds that focus on commodities or property. Multi-asset funds may hold an array of different types of assets, such as shares and bonds.
Some funds are geared towards specific regions or segments, such as emerging markets or green investments. Some also have a variety of specific investment objectives for example, such as targeting specific growth rates or reducing risk that is not systemically controlled. Others have a more general investment goal, like low-cost investing.
Your investment duration and your approach to risk will determine the kind of unit trusts, OEICs, and investment trusts you select. Younger investors might be more willing to accept a higher amount of risk, and thus choose funds with a greater proportion of stocks. Alternatively, those who are close to retirement or have family obligations may choose to take an easier risk and pick a fund with a higher percentage of bonds.