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Choosing an investment fund

There's always a lot of talk as to which funds have performed well over the last few years. However choosing an investment fund based purely on it’s recent performance can be a risky move. These funds might, perhaps, have had their best days and you could end up being sucked into investing in what may be a short-term high.

It is advised that in order to spread risk, investors pick a variety of funds to invest on. This will ensure that, if one or more fund is performing badly in the future, other funds will hopefully be performing better, and you won’t lose out. It is important to bear in mind though that investments, no matter what they are concerned with, are normally considered long-term and as such are likely to experience a variety of levels of performance over their life.

Generally, funds that are invested in different areas react differently to any movements in the market. In 2008 for example, we saw a large drop in equity values, and a lot of future investment performance depended on what position the individual funds had taken over the months prior to this.

Investing is a well-proven and easily accessible way for people to grow their money, and with a huge variety investment engines available there is usually something for everyone. However there is a risk that comes with investing – the risk that your fund may shrink or grow. Usually the higher risk investments have potentially greater return, and some people find these more attractive because of this. But it is possible to effectively manage your risk, meaning that if you want to eliminate the prospect of your fund shrinking too much, you simply make safer investments.

If you have any questions about future investments, or any current investments you currently manage, please contact one of our financial advisers.

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