HOW DO I CHOOSE A FUND?
To help you choose a fund that suits your particular attitude to risk, investment funds have a risk rating, based on the short-term volatility of the fund – that is, the extent to which it has gone up and down. These fluctuations are caused by a range of factors, including geographic location, the market, the companies in which the fund invests, the exchange rate affecting the fund, and the range of stocks in which the fund invests.
You may want to consider international funds. Generally speaking, these carry greater risks to the ups and downs of the exchange rate. Also, some invest in insecure markets of developing countries. However, investing internationally can give your money wider scope for opportunities to grow.
Investing in a variety of funds is often the best strategy. Whilst high funds can increase the value of your investment, any losses you might also make investing in these funds can be absorbed by the income or capital from the low risk funds you invest in.