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INTRODUCING INVESTMENT
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USING FUNDS TO SPREAD THE RISK OF YOUR INVESTMENTSpreading risk and getting a good mix of assets is often known as "diversification". You can invest directly by buying shares/bonds in different companies. You can also use funds known as collective investments, which pool your money with that of other investors and typically invest across a range of assets. DIRECT INVESTMENT IN SHARESThe first thing to consider is whether you are happy to have someone else managing your money or whether you want to have sole control over where it is invested. If you want to take control yourself, you can build up a "portfolio" of shares/bonds in different companies across different sectors. |
WHAT IF..... My investments fall in value? Investing in the stock market can be volatile, particularly when holding individual company shares. Stock markets move up and down on a daily basis and short term falls in the value of your shares are not unusual. If you are not prepared to see short term falls in the value of your investments in order to make long term gains, then investing in the stock market, either directly or collectively, is not for you. The key thing to remember is that investing directly in stocks and shares should only be for experienced investors. |
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Building a portfolio of individual shares in this way can be expensive, particularly if you are investing relatively modest sums or if you want to invest outside the UK. The research and dealing can be time consuming. In general, this is something that only experienced investors should tackle. For these reasons, many investors choose to invest in the stock market by pooling their money with that of other investors in one or more funds. The main types of fund or pooled investments are as follows: Investment Funds: Authorised Unit Trusts and OEICs Individual Savings Accounts (ISAs) <<Previous Next >> |
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