What Are Investment Funds?

There are ways of investing in shares and other assets without owning them individually.

An investment fund is a fund which allows the investor to spread their risk by investing in a pool of different enterprises. These may include cash, bonds, equities, property and commodities.

The investment fund is run by a fund manager who takes a charge for his services.

How much to invest

Most investment funds require you to invest a minimum amount; perhaps £1000 as a first installment.

One method of investment is to spread your investment over a period of a year or so; perhaps £500 lump sumps over regular intervals.
It is difficult to get the timing right when buying investments. Some people advocate the principle of pound-cost-averaging. This involves buying a fixed sum of product at regular periods. This means that some product will be bought when it is expensive, but more of it will be bought when it is cheap.

The same principle can be applied to stocks.

On the interactive investor website, it shows you a list of the funds you can apply for. It gives you the following information :-

Name
Performance
Risk rating
Yield
Fund mangager charge

The performance will tell you how well the fund has performed over the last few years.

The risk rating will tell you whether the fund is of low medium or high risk.

The yield indicates how much income the fund generates.

You can choose to invest in an income fund or an accumulation fund. An income fund gives you an annual income and an accumulation fund reinvests the yield to buy more of the product.





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