New to investing in funds and don't know where to start? Our Danimation series of bite-size video guides will explain the basics.
Funds Insider editor Daniel Grote has been given a cartoon makeover in the first of this new series. It's a short video, but if you can't watch it now, here's the transcript.
Hi! I’m Daniel Grote, editor of our brand new Funds Insider website.
This is the first of a series of videos we’ll be producing to help you get to grips with the basics of investing in funds.
Funds are a way for people to pool their money and invest in lots of different assets, like shares, bonds, commercial property or natural commodities like gold and oil.
You could invest in some of these things yourself, and many people do. But the benefit of funds if you are starting out in investment is that they can give you access to a much broader spread of assets than you would be able to build up on your own, unless you were starting out with a lot of money!
And if you want to invest in these sorts of assets, but don’t know which particular ones to pick, a fund can be a good place to start. Most funds, but not all, will be run by an individual manager, or team of managers, picking the investments they think will do well. You pay for this through an annual management charge which is taken from the money you invest in the fund.
The aim of most investors in funds is to get a better return on their money than they would by keeping their cash in a bank account. But in order to deliver that bigger return, fund managers need to take some risks with your money, like investing in the stock market.
That means your investment can go down, as well as up. But typically, the longer you stay invested, the better your chances of getting a good return. That’s why most experts say that if you’re investing in funds, you should do so for a minimum of five years.
In our next episode, I’ll be running through the different types of funds you can invest in. See you soon!