Investing and Risk

This page includes some of the good reasons for making investments into ‘funds’ run by ‘fund managers’ on behalf of the investors. 

Whether you are looking at investing in a pension, an investment bond or perhaps using a New Individual Savings Account (NISA) you might consider using investment funds. Put simply, a fund is a collection of many different peoples money in one place. Buying large numbers of shares or achieving a portfolio of investments may well be beyond most average investors so they, in effect, club together to increase their purchasing power. 

Typically these pools of money are run and managed by an investment specialist. The manager is paid to make the day to day decisions of where the pooled money is invested. Rather than individuals (who have no interest in markets and shares, or who don’t have the knowledge or time to study market information) choosing which shares to buy, to hold and to sell and at what time, the fund manager uses their expertise to make suitable investments in order for the value of the pooled fund to hopefully grow over time.

Another advantage of pooled investment is being able to diversify. 

Diversification and Risk 

All investments carry some element of risk. The value of the fund can fall as well as rise and you may not get back the full amount you originally invest. To enable funds to be able to manage the risks the manager will usually practise some level of ‘diversification.’ This works on the premise that holding two different shares is better than two of the same shares. This is because all shares react differently to investment conditions and changes. 

For example, imagine that there are only 2 companies, one company making t-shirts and one company making woolly jumpers. If the weather forecast is for sunshine, then investors would be wise to buy shares in the t-shirt company as they expect demand for t-shirts to increase and sales to rise, increasing the company share price. However, we know that it is not always sunny and therefore a good manager would buy shares in both companies, so when one share price is static or even falling the other is able to support and perhaps offset the falls, meaning that the investor doesn’t suffer a loss.


The value of investments may fall as well as rise. You may get back less than you originally invested.

What our clients say about us

“I have been very pleased with the level of knowledge and experience of Berry Wealth Management. They take the time to really get to know their clients, which gives me every confidence that my financial goals are understood. They regularly provide updates, and have always been available to answer any questions or to explain options within my portfolio. Transitioning into retirement has been much more comfortable thanks to their help and guidance.”

~ David Leaney

 

“We have been advised by Colin for the past nine years. During this time, we have been extremely pleased with the indepth advice. The frequent reviews have helped us make some excellent, well-informed financial decisions. Colin has always attached an excellent element of professional tax-efficient advice coupled with caution that has comforted us in many ways. We wish that we had met Colin earlier, as we would have enjoyed more longevity of first-class financial planning advice.”

~ Keith & Joanne Hobbs

 

“Colin has been our financial adviser for nearly two decades, he has always offered a consultative approach to financial advice, and this has most definitely enabled Elizabeth and I to retire earlier. Colin also has a good selection of contacts for other areas where advice might be required, and having a trusted source for such recommendations has been invaluable. I do not like the larger companies’ impersonal approach and feel we are valued customers of Berry Wealth Management.”

~ David & Elizabeth Donnelly