Investments and funds
Investment funds are investment vehicles that pool the money of investors and then invest it in a portfolio consisting of bonds, stocks or other assets. Each fund is managed by a person that makes decisions about the type of assets to purchase or sell, and also charges an administration fee for the fund. There are a variety of investment funds, such as unit trusts (UCITS), OEICs, and open ended investment companies (OEIGCs).
When investing in funds it is essential to consider the reasons why you are investing as well as your https://highmark-funds.com/2021/12/23/market-risk-management-and-risk-calculations investment profile, which shows your risk tolerance and how long you plan to invest. For instance, younger investors may have more time on their side and feel more at ease with a higher degree of risk to maximize growth over the longer term.
Diversification can be a great way to lower your risk, as is saving. Diversification involves spreading your money over different types of assets with less correlation in their price fluctuations. This lets you offset the loss of value in one asset class by a gain in a different asset class.
Low-cost or smart beta investment is another method to lower risk. These are passively managed funds which attempt to replicate movements of a specific index of the market such as the FTSE 100, or S&P 500 without the need for judgement.