Month: October 2018

INVESTING IN A FUND

A fund is an investment vehicle which pools the money of investors and invests it according to a defined set of investment objectives.

Investing in a managed fund can avoid some of the problems of buying shares direct. As well as removing the research required, funds can invest in a much wider variety of companies and assets than you would normally be able to. This is because the money contributed by all the investors in the fund are ‘pooled’ together to buy collectively and share dealing costs. This spreads the risk, reduces the possibility of large losses, and can increase the chances that your money will grow.

HOW DO I BALANCE RISKS WITH REWARDS?
The general rule with investment is, the greater the risk, the greater the potential reward. Before any investment, you should consider the risk and your attitude towards it. This is a personal matter, and everyone is different.

Some people choose to invest only in low risk investments, while others favour higher risk products that offer the possibility of higher returns. Or you decide on a mixed approach to risk: for example, investing initially in low risk investments to give relatively strong protection for your capital.

With these more secure investments in place, you could then use any spare cash to invest in higher risks products which offer the possibility of higher returns – in effect, choosing a balance of lower risk and higher risk investments.

These are only sample strategies, however. The choice is yours, and you should always consider your options carefully and, where necessary, take professional advice before deciding on your investment approach.

HOW DO I BALANCE RISKS WITH REWARDS?
Risks and rewards are difficult to assess with any accuracy, and investing in any asset involves a degree of risk. But because there are so many different savings and investment products around, with a little research, you’re bound to find a product, with a risk level you feel you’re comfortable with.

Investments vary from the very secure (deposit accounts) through collective funds (with profit life funds, unit trusts and investment trusts) to individual stocks and shares, property, and specialized investments such as antiques, artworks and other collectibles. Even collective funds can carry a varying degree of risk, depending on what they invest in and how they are managed.

HOW DO I INVEST FOR GROWTH?
The aim of the growth fund is for the value of the shares it holds to increase over time. Investing in this way for five years or more could help you achieve long-term goals such as buying a second home, paying a daughter’s wedding, or funding a university education. A well-managed growth fund may be capable of financing major life goals beyond the means of a savings account.