Types of investments

There are many different asset types in which you can invest, each with their own levels of risk and potential reward. As a rule of thumb, high growth potential means high risk, and vice versa.

Securities

Securities come in three varieties: equities, bonds and derivatives.

  • Equities are stocks and shares in companies. Historically they have performed better than most other investments over time, but are volatile – they can go down as well as up.
  • Bonds are essentially loans in which you are the lender, receiving your money back with interest over a fixed period of time. Generally lower-risk than equities, though some are more high-risk than others.
  • Derivatives are contracts that derive their value from the performance of another asset. Even seasoned investors should approach these complex products with caution.

Commodities

Commodities are physical things like metals (e.g. gold), resources and farm produce, which can sometimes form part of an investment portfolio. Relatively high-risk, their big advantage is that they perform independently from equities, so can be a good way to balance out your stocks and shares.

Collective investments

Collective investments may appeal to you if you want to invest in a range of different assets but don’t have the time or knowhow to build a portfolio yourself.

  • Mutual Funds or Unit Trusts are one of the Collective Investment styles. Mutual Funds companies invest in assets (such as securities) on your behalf and structure an investment portfolio. You buy shares/units in the company itself, which rise or fall depending on its performance. There are Open-ended funds and Close-ended funds in the market.

Offshore investments

The advantages of overseas investments include tax benefits, diversifying assets portfolio, currencies appreciation, speculation opportunities etc.

Find out more about the different investment types from the menu on the left. Your Private Wealth Manager can help you decide on the best products for you from across the whole of the market. Find a PWM here.