1. Review your needs and goals
It’s well worth taking the time to think about what you really want from your investments. Knowing yourself, your needs and goals and your appetite for risk is a good start, so start by filling in a money fact find.
Know your risk appetite
Complete a money fact find with Hemisphere Financial Advisory team
3. Make an investment plan
Once you’re clear on your needs and goals – and have assessed how much risk you can take - draw up an investment plan. This will help you identify the types of product that could be suitable for you
2. Consider how long you can invest
Think about how soon you need to get your money back. Time frames vary for different goals and will affect the type of risks you can take on. For example:
• If you are saving for a house deposit and hoping to buy in a couple of years, investments will not be suitable because their value goes up or down. Stick to cash savings accounts.
• If you are saving for your pension in 25 years’ time, you can ignore short-term falls in the value of your investments and focus on the long term. Over the long term, investments tend to give you a better chance of beating inflation and reaching your pension goal.
Diversify into the right assets at the right time
It’s a basic rule of investing that to improve your chance of a better return you have to accept more risk. But you can manage and improve the balance between risk and return by spreading your money across different investment types and sectors whose prices don’t necessarily move in the same direction – this is called diversifying. It can help you smooth out the returns while still achieving growth, and reduce the overall risk in your portfolio.
Investment products
You can invest directly in investments, like shares, but a more popular way to invest in them is indirectly through an investment fund. There are many different ways to access investment funds, for example through products such as an ISA or your workplace pension.
The table below briefly describes the most popular ways to invest your money. You can read more about each by following the links. Also, refer to the note below the table on how the level of fees charged may impact any potential return you receive.
Top tips for choosing investments. Use these tips and key steps to help find an investment that’s right for you
Direct investments
Shares
How it works
Shares offer you a way of owning a direct stake in a company - also known as equities. Their value rises and falls in line with a number of factors which may include the company’s performance or outlook, investor sentiment, and general market conditions.
Investment funds (indirect)
Unit trusts and open-ended investment companies (OEICs)
Investment trusts
Insurance company funds
Tracker funds
REITs
How it works
Funds managed by a professional investment manager. There are lots of different strategies and risk levels to choose from and they can invest in one or more different asset classes.
Investment trusts are companies quoted on the stock exchange whose business is managing an investment fund, investing in shares and/or other types of investment. You invest in the fund by buying and selling shares in the investment trust either directly or through the products listed in the next table. Once again, there are lots of different strategies and risk levels to choose from.
Investment funds run by life insurance companies. When you invest through an insurance or pension product (see table below), you often choose how your money is invested. The choice may be from the insurance company’s own funds or investment funds, such as unit trusts, run by other managers.
Some investment funds adopt a ‘tracker’ strategy. The value of the fund increases or decreases in line with a stock-market index (a measure of how well the stock market is doing). Trackers funds often have lower charges than other types of fund.
These are a special type of investment trust that invests in property. Similar OEICs are called property authorised investment funds (PAIFs).
Investment products (indirect)
Stocks and Shares ISAs
Workplace pension
Personal pension
Investment bonds
Endowment policies
Whole-of-life policies
How it works
A tax-free way of investing in shares or investment funds, up to an annual limit. Many unit trusts and OEICs come pre-packaged as ISAs. Alternatively, you can choose for yourself which investments and funds to put in your ISA.
A way of investing for the future, with a contribution from your employer and tax relief from the government. Your money is invested in pooled fund
A way of investing for the future, with tax relief from the government. You can use it instead of or as well as a workplace pension. Your money is invested in pooled funds.
A life insurance contract that is also an investment vehicle. You invest for a set term or until you die.
A life insurance policy that is also an investment vehicle. It aims to give you a lump sum at the end of a fixed term. Often you choose which investment funds to have in your policy
A way of investing a regular amount or a lump sum as life insurance. It pays out on death, and is often used for estate planning. Often you choose which investment funds to have in your policy.