Picking an investment is tricky with so much choice, costs and jargon to wade through.
Even if you opt not to pick individual shares and get someone else to do it for you, choosing the right investment means deciding between funds and trusts, trackers and exchange traded funds, active and passive strategies – and that’s all before you get to asset classes, regions and sectors.
So to help point you in the right direction, This is Money gets the experts’ ideas on funds and investment trusts for first-timers and cautious investors, income investors, those looking to emerging markets – and those who would rather shun active managers and choose a low-cost tracker.
We have also pulled together our thoughts on the best DIY investing platforms to invest through and guides on how to invest in funds and shares, along with a few essentials to think about.
Bright ideas: We asked experts for help in narrowing down the best investments
Why invest in funds and investment trusts?
Investing over the long-term makes sense. If you want to grow your wealth, beat inflation and have the satisfaction of knowing you are not reliant on lowly savings rates, then investing offers the opportunity to potentially do that.
For many, investing through funds and investment trusts is a wise choice. Unlike individual stock picking, your eggs are not in one basket and you get to spread your risk and either benefit from an experts’ investment skills, or in the case of a tracker spread your risk across a set basket of shares or bonds.
The problem is how do you tell the delights from the duffers.
This is Money asks experts we consider worth listening to to suggest investments for a variety of investors. These are people with a long history in the investment field and looking at their choices gives you some vital pointers to the world of investing.
Of course, which fund is best for you depends hugely on your individual circumstances and what investing story you think will unfold. These are just ideas to point you in the direction of what the experts would choose.
Read the tips, follow the links to the funds’ performance and read This is Money’s Investing section, DIY Investing section and Index investing section to gather ideas.
If you have any doubts, talk to an independent financial adviser [find an adviser].
1. Six simple steps for wiser investing
2. How to invest in funds, investment trusts and ETFs
3. How to invest in shares
4. How to pick the best (and cheapest) investing Isa
The experts’ fund tips
We have divided the ideas into categories. If in any doubt, you should seek personal financial advice. Remember these are just ideas and your circumstances may not suit them. Always do your own research.
> First-time and cautious investors – solid and less volatile funds
> Income funds – Boost your income or reinvest dividends for growth
> Emerging markets – Higher growth from more exotic economies
> Adventurous investors – More risk for potentially higher rewards
Tracker funds and ETFs
These type of investments use
computers to track a particular index, which may be a stock market, or tilted towards a particular basket of investments – that means they don’t
have to employ an expensive fund manager and therefore carry low
You also don’t have to worry about the lottery of picking a
fund with a talented manager, despite their market beating claims
historically most of them have underperformed tracker funds.
Fans of index investing argue that as the average fund manager doesn’t beat the market over the long-run – and it is very difficult to find those that do in advance – you should simply opt for a broad-based tracker and allow capital growth, dividends and regular investing to grow your wealth.
Others suggest using specialist trackers and ETFs to target certain markets. We highlight the best trackers below and also the breed of trackers that will do everything for you.
> The cheapest and best tracker funds
> The cheap but boring tracker funds that do all the work for you