It is a great method to reach your long-term financial goals and to grow your capital. It is also possible to do this with the assistance of a professional advisor who can help you to balance your financial situation and level of comfort with risk against the need for growth potential and the protection of your principal.
Investment funds pool your savings as well as those of other investors. A fund manager will buy, hold and sell investments on your behalf. Most funds consist of different assets, which reduces risk of investment. However, some funds are more specific than others, for instance funds that focus on property or commodities. There are also multi-asset fund that might hold a mix of different asset types, including bonds and shares.
Some funds are geared towards particular regions or segments such as emerging markets or green investment. A lot of funds have specific investment objectives, for instance, cutting down on unsystematic risks, or aiming for a certain degree of growth. Others have a general goal for investing like low cost investing.
Your investment duration as well as your attitude to risk will determine the type of unit trusts, OEICs, and investment trusts you select. Younger investors might be more inclined to take on a larger level of risk, and thus choose funds that have a higher proportion of stocks. For those who are nearing retirement or who have family commitments might prefer to take on less risk and select a fund that has more bonds.
