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Savings & Investments (2)
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The scope of what funds (collectives) can invest in vary widely - ranging from fixed interest, cash, derivatives, shares, bonds, land, forestry, wine, commodities and property - pretty much any asset class you can think of! Depending on the underlying investment philosophy collectives can, therefore, be a risky investment or a relatively safe investment.

As an example - a fund investing in Commodities or the Far East will likely be a much riskier and more volatile investment than one that invests in say, Fixed Interest, Cash or Bonds. It is important, therefore, to understand the underlying remit of the manager before deciding whether to invest via funds.

You could, of course, invest directly in individual companies. However, this approach is not suitable for most people as they do not have the time and knowledge to be able to monitor performance effectively and the risks of investing in individual companies are often high. It is generally wiser to leave the tactical and strategic decisions on which company to invest in to the professionals – which is where funds come in.

Then there is ‘With Profits’. The concept of ‘With Profits’ is to smooth out the rises and falls in the stock market over a period of time. A ‘With Profits’ fund will hold back some of the profits in good investment years in order to make up the difference in the not so good years. This allows the manager to ‘smooth’ returns in the not so good years. An investment in a ‘With Profits’ fund should remain invested for the medium to long term to ensure that you benefit fully from the smoothing effect.

Whether you are considering a new With Profits investment or would like your existing With Profits arrangements reviewed, it is import to seek expert advice to ensure that you choose the best option possible.

With all investments it is important to note that past performance is no guide to future performance and that share values and the income generated
from them can fall as well as rise.

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