Investment and Risk
Whether you are looking at investing in a pension, an investment bond or ISA (Individual Savings Account), you might consider using investment funds.
A fund is capital belonging to numerous investors, held in one place and used to collectively purchase securities, while each investor retains ownership and control of his own shares. Buying large numbers of shares or achieving a portfolio of investments may well be beyond most average investors so they effectively club together to increase their purchasing power.
Typically, these pools of money are run and managed by an investment specialist. The manager is paid to make the day-to-day decisions of where the pooled money is invested. The fund manager uses their expertise to make suitable investment decisions in order for the value of the pooled fund to hopefully grow over time.
Another advantage of pooled investment is being able to diversify.
Diversification and Risk
All investments carry some element of risk. The value of the fund can fall as well as rise and you may not get back the full amount originally invest. To enable funds to be able to manage risk, the manager will practice some level of diversification. This works on the premise that holding two different shares is better than two of the same shares. This is because all shares react differently to investment conditions and changes.
For example, imagine that there are only two companies, one company making t-shirts and one company making woolly jumpers. If the weather forecast is for sunshine, then investors would be wise to buy shares in the t-shirt company as they expect demand for t-shirts to increase and sales to rise, increasing the company share price. However, we know that it is not always sunny and therefore a good manager would buy shares in both companies, so when one share price is static or even falling, the other is able to support and perhaps offset the falls, meaning that the investor doesn’t suffer a loss.
The team at Pinsa Wealth has over 40 years experience providing practical financial planning advice to people, families and businesses.
We provide you with impartial advice and services, delivered in plain English and tailored to your individual needs.
We arrange bespoke solutions for our clients, providing a tailored one-to-one advisory service, delivered face-to-face or remotely, depending on what suits you.
Please click on ‘Become a Client, Enquire Now’ at the bottom of the page and complete the enquiry form and we will normally contact you within the same working day during business hours or if you would prefer us to contact you outside normal business hours then please advise and we will quite happily do so. Alternatively you can email us with details about your requirements to info@PinsaWealth.co.uk or call us on 0151 372 5500
Past performance should not be taken as a guide to future performance. The underlying value of investments, and the income from them, can go down as well as up, and you may not recover the full amount of your original investment.