It is a great way to grow your funds and achieve long-term financial goals. 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 versus the need for growth potential and the security of your principal.
Investment funds pool your savings and those of other investors. A fund manager can purchase, hold and sell investments on your behalf. The majority of funds comprise a mixture of assets which reduces the risk of investing. However, some funds are more specialized than others, for example funds that concentrate on property or commodities. There are also multi-asset funds that can hold a mix of different types of assets, including shares and bonds.
Certain funds are targeted towards a specific region or sector, such as green or emerging markets. There are also funds that have a range of specific investment objectives, for instance, targeting specific growth rates or reducing risks that are not systemic. Others have a more general investment goal, 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 may be more willing to accept a higher level of risk and therefore, pick funds that contain a higher proportion of stocks. On the other hand, those nearing retirement or with family commitments might want to take on less risk and choose a fund that has more bonds.