The investment process can be a fantastic way to grow your funds and achieve long-term financial goals. It is also possible to do this with the help of a professional advisor, who will help you balance your financial situation and level of comfort with risk, balancing the need for some growth potential and the protection of your principal.
Investment funds pool your savings as well as the savings of other investors. A fund manager then buys the investments, holds them and then sells them on your behalf. Most funds consist of a mixture of assets which reduces investment risk. However, some funds are more focused than others, for example funds that focus on property or commodities. There are also multi-asset funds that may hold a mixture of different types of assets, including shares and bonds.
Some funds are geared towards a particular region or sector for instance, emerging markets or green investment. Some also have a variety of investment goals for example, such as targeting specific growth rates or reducing risks that are not systemic. Others have a common investment goal, such as low cost investing.
Your investment timeframe and your approach to risk will determine the type of unit trusts, OEICs, and investment trusts you select. Younger investors might be more willing to take on a greater level of risk and therefore choose funds that have a higher percentage of stocks. On the other hand, those nearing retirement or have family obligations may choose to take the risk at a lower level and select a portfolio with a higher percentage of bonds.
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