It is a great method to reach your long-term financial goals and to grow your capital. It is also possible to accomplish this with the assistance of a professional adviser, who can assist you in balancing your financial situation and your level of comfort with risk in order to allow to grow your portfolio and the security of your principal.
Investment funds pool your savings and the savings of other investors. A fund manager can buy, hold and sell investments on your behalf. Most funds consist of an assortment of assets that reduces the risk of investing. However, some are more specific than others, for instance funds that concentrate on property or commodities. There are also multi-asset funds which could contain a mix of various asset types, including shares and bonds.
Some funds are geared towards a particular region or sector like emerging markets or green investment. There are also funds that have a range of investment goals, for instance, targeting certain levels of growth or reducing risk that is unsystematic. Others have a general goal for investing for example, low cost investing.
The type of unit trusts, OEICs and investment trusts you pick will depend on your investment timeframe and your approach to risk. Younger investors might be more willing to accept a higher level of risk, and therefore, pick funds that include a higher proportion of stocks. On the other hand, those approaching retirement or have obligations to their families might want to choose a lower level of risk and choose a fund that has more bonds.