Why you might choose to invest in funds

If you currently have your investment income in stocks and shares, then that is the same as a lot of other people. But many now diversify and spread income into other types of investments too.

In recent years there has been a lot of focus on property, and with prices soaring until the check in the last couple of years, many people infact decided to effectively put money into property to create their eventual pension income rather than putting it into a pension, in sync with the decline in the attractiveness of pensions for a wide range of different reasons.

One of the other popular places to invest money with some investors is funds. Whereas a share is in one company, with a fund typically there will be many tens of different companies whose shares make up the fund. And this is one of the many reasons why fund investments are popular, due to that spreading of the risk.

And similar to shares, if you put all your share investment money into one company you are highly exposed, but if you spread it around several shares then you spread the risk - likewise with funds - if you spread your investment around several funds rather than putting it all in one then again you spread out the risk.

You will need to choose which fund types to invest in - those that invest in equity, bonds or property for instance, and this in turn will be in part defined by whether you are investing long term or short term - clearly with property then you would generally invest in a property fund as a long term play to benefit from anticipated long term rises in property prices, which are unlikely to change much day by day in the way that of course an individual share would.

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Why you might choose to invest in funds

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