Investment and Funds

https://highmark-funds.com/2020/11/10/personal-finance-forum/

Investments and funds

Investment funds are investment instruments that pool the funds of investors and then invest it in a portfolio of bonds, stocks, or other assets. Each fund has a manager that makes decisions about what to purchase and sell, and also charges an administration fee for the fund. There are various types of investment fund, including unit trusts (UCITS), OEICs, and open ended investment companies (OEIGCs).

When you are considering investing in funds, it is essential to consider the reasons behind your decision and how long you’d like to invest and also your profile as an investor that reflects your level of willingness to take risks. For example, younger investors may have more time and are more at ease with a higher degree of risk to maximise growth over the long-term.

Diversification is a great method to lower your risk just like saving. Diversification refers to spreading your money over different asset classes with lower correlations in their price fluctuations. This lets you offset the loss of value in one class of asset by a gain in a different asset class.

Another way to mitigate risk is by using smart beta or low-cost investment. These are funds managed in a passive manner that attempt to replicate changes of a specific index in the stock market like the FTSE 100, or S&P 500 without the need for judgment.