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Taking control of your finances means enjoying the benefits but also understanding the downsides. In the investment world we usually call this ‘financial risk’. But with a little investment know-how you can learn to manage and minimise these risks.
As we all know, the value of your investment can rise and fall as the markets fluctuate. There are no certainties, you might make a profit, or you might make a loss. And if you invest in the overseas markets, your investment may also be affected by movements in exchange rates.
However some investments are lower risk than others. The rule of thumb is that the more risk you take, the more you stand to gain or lose. So it really depends on how you approach risk. If you have a long-term financial goal and are comfortable with greater risk, you might prefer to invest in higher-risk assets like individual Shares. Or if you have short-term financial goals, investing solely in Cash investments could be for you.
However, there is an option which is, in general, less risky than individual Shares but still benefits from stock market performance – Equity Funds.
An Equity Fund pools smaller investors’ money and invests it in Shares of other companies. This kind of collective scheme can invest in companies across multiple, widely varying industries and geographies, something that’s a lot harder to do on your own with limited resources. By not putting all your eggs in one basket, you can enjoy some peace of mind knowing that the risks and rewards have been spread out.
Get more information on our Funds Overview page.
So before deciding how much risk to take on, ask yourself:
Risks and rewards are part and parcel of investing. Learn to identify and manage the different risks that come with the different types of investment, so you can approach your finances with all the tools and knowledge you’ll need.
Why not take a look at : play which will enable you to have a risk-free try at selecting Funds?Find out about : play
Learn all about ISAs, check out our transparent charges and see how easy it is to open an account on our platform.Find out about ISAs
Use our Funds, Shares, Investment Trusts and ETFs research tools to find options that meet your needs.Take me exploring