Diversify Your Investments

It is important not to put all your eggs in one basket when it is time to invest. There are significant losses when one investment is unsuccessful. Diversifying across different asset classes, such as stocks (representing individual shares in companies) bonds, stocks or cash is a more effective strategy. This will reduce the fluctuations in your investment returns and let you enjoy a greater growth rate over the long run.

There are many kinds of funds, such as mutual funds, exchange-traded funds and unit trusts (also known as open-ended investment companies or OEICs). They pool funds from a variety of investors to purchase stocks, bonds or other assets and share in the profits or losses.

Each fund type has its own characteristics, and each comes with its own https://highmark-funds.com/2021/07/08/generated-post-2/ risk. Money market funds, for example are a type of investment that invests in short-term securities issued by federal local, state, and federal government or U.S. corporations, and are typically low-risk. Bond funds have historically had lower yields but are less volatile and provide a steady income. Growth funds search for stocks that do not pay a regular dividend however they have the potential to increase in value and provide higher than average financial gains. Index funds track a specific index of stocks, such as the Standard and Poor’s 500, while sector funds specialize in certain industries.

It’s important to understand the types of investments and their terms, whether you choose to invest via an online broker, roboadvisor, or another service. The most important factor is cost, as charges and fees can cut into your investment returns over time. The best online brokers and robo-advisors will be transparent about their charges and minimums, and provide educational tools to help you make educated decisions.