03.What type is best for me?
The type of fund that’s right for you mainly depends on your goals, risk profile and the timeframe you have in mind — your ‘investment strategy’. A financial adviser can help you work this out.
Funds fall into two broad groups: growth or income?
- Cash, fixed interest and mortgage funds are mainly ‘income’ investments — their returns are more stable and foreseeable.
- Property and shares are more volatile ‘growth’ investments with the potential for high returns if their value rises. They may also provide some income from rents or dividends (a share of the company’s profits).
Learn more about each sector and the different types of funds investing in them.
What mix of funds for me?
Your individual circumstances will dictate what asset classes are appropriate for you.
Consider your investment timeframe, goals and risk profile. ‘Investment risk’ is exposure to the chance your financial expectations won’t be achieved. Use our Investment risk quiz to work out your attitude to investment risk.
The pie charts give examples of appropriate funds for a conservative, moderate and aggressive investor.
Choose a mix of funds and an investment approach that matches your needs in terms of risk, balance between income and growth, investment duration and tax considerations.
If you invest through a financial planner, ask them whether they have a relationship (like ownership ties or they receive special commissions/benefits) with the fund they’re recommending. You want a fund that suits you, not your adviser.
Our last study of financial advisers in 2003 found that the standard of advice is inconsistent. Almost one in five failed to meet our requirements.