1. 
2. 

1. 
2. 
3. 
4. 
5. 
6. 
7. 
8. 

Investments are a bit like agreeing to go on a blind date. You may be slightly anxious, and there is certainly a level of risk involved because you don't know what the end result will be. But if you do have some money, should you be afraid to invest it?

With careful consideration, and a bit of luck, you can make your money work for you. In order to get the potential of a higher return, you need to decide how much risk you are prepared to take and how much accessibility you are prepared to give up.

The options

Each type of investment has comparative advantages and disadvantages, so you need to be clear about these and weigh them up. Here are a few of the options:

A unit trust is a portfolio of investments that spreads your risk. You can reduce your risk exposure by pooling your investment. When investing in a unit trust, cash buys units. Each unit trust has thousands of people holding units in the fund. Unit trusts are viewed as medium risk investments, although the exact risk level will depend on the type and fund selected.

An Investment Trust is a company in which shares can be bought, and which must be quoted on a Stock Exchange, usually the London one. It is a pooled investment, with many investors owning shares in the same trust. The investment trust makes its profits by investing in the shares of other companies rather than by manufacturing a product that it then sells.

With Profit Bonds usually require lump sum investments. Here's where it gets complicated - the investment buys units in the insurer's With Profits fund. This fund invests in a wide range of underlying assets such as shares, fixed interest securities and property. Each year bonuses are added to the sum assured either by an increase in the price of units or by allocation of extra units.

Guaranteed Income Bonds are a short-term life assurance contract, guaranteeing a fixed income over a fixed term. Say what? Well, the original investment is guaranteed to be repaid in full at the end of the term. The term is usually between three and five years, and the investment consists of fixed interest stocks.

Any extras

A bit like World War II bomb shelters, you may have heard of PEPs (Personal Equity Plans), but they are pretty much defunct now. You can't actually start a PEP nowadays, but they are still in circulation. They are a tax-efficient savings-plan that invests in unit trusts or investment trusts.

Individual Savings Accounts (ISAs) replaced PEPs on 6th April 1999. Any savings already sheltered in PEPs are allowed to remain, and enjoy tax breaks broadly similar to those offered under ISAs. So you can't have a PEP, but at least you now know what one is.

Risk goes hand in hand with timing; you should not use a high-risk product to meet a short-term need. If you don't need to have instant access to your money, the longer you can commit money for, the more time it has to work harder for you and the greater the potential return.

Loan Amount
Mortgage Rate
Year to Pay
CALCULATE

 History is always written by the winners. 

Dan Brown