Gavin Lumsden transforms into the 'Gavatar' for the first of his series of video beginner's guides to investment trusts and investment funds.
This is a short video but if you can't watch it now ...
Here is the transcript
Hello, have you heard about investment funds and investment trusts but don’t what they are?
Here's the first of my really quick guides to give you the basics fast!
Investment funds are an efficient way for people to pool their money and invest in the stock market.
Putting money into a fund gives you access to a group of investments that would take you longer and require more money to do on your own.
The fund is looked after by a professional manager who chooses which investments to buy and sell and who is paid an annual management fee taken from your money.
Funds can invest in all sorts of assets in the UK and abroad.
For example, shares in companies seeking to grow; bonds from governments and businesses borrowing money; or commercial property; or natural commodities such as gold, oil and wheat.
Whether they in invest in one, some or all of these, a fund will aim in time to increase your money faster than if you left it in cash.
If you hold funds in an individual savings account or pension they can grow free of tax.
However, their performance can't be guaranteed. Stock markets are risky and you could lose your money.
You need to invest for a minimum of five years to boost your chances of getting a good result.
Next time I'll tell you about the three different types of fund, including investment trusts!