The investment process is a great way to reach your financial goals and increase the value of your capital. It is also possible to accomplish this with the assistance of a qualified advisor who can assist you in balancing your financial situation and your comfort level with risk against the need for growth potential and the protection of your principal.
With investments, your and the savings of other investors are pooled together. The fund manager will purchase, hold and even sell investments on your behalf. The majority of funds are a mixture of assets which reduces the risk of investing. Certain funds are more focused, such as ones that focus on commodities or property. Multi-asset funds can hold various asset classes, such as shares and bonds.
Some funds are geared towards certain regions or sectors like emerging markets or green investments. Many funds have distinct objectives for investment, such as reducing unsystematic risks or aiming at a certain amount of growth. Others have a more general investment focus, such as low-cost investing.
The type of unit trusts, OEICs and investment trusts you select will depend on both the length of your investment period and your risk tolerance. Younger investors might be more willing to accept a higher degree of risk, and therefore, pick funds with a greater percentage of stocks. Alternatively, those approaching retirement or with family obligations might prefer to take a lower level of risk and opt for a fund that has more bonds.