Before you start thinking about what to invest in, it’s important to know what you are investing for. Is it for income in retirement perhaps, or maybe to grow wealth for a pension or to build a nest egg for children?
If you don’t know yet, have a look at section one of this guide How to get started.
If you know your goals and have decided you’d like to invest in an investment company, it’s important that you don’t choose one based on its past performance. If an investment company generated a return in the past, or produced an income, that’s not a guarantee it will do the same in future.
What should you consider?
A company’s basic structure and goals are far more important than its past performance. You should make sure it suits your individual needs.
Make sure you know:
- What the company invests in.
- Its charges.
- Your own investment objectives.
- How risky it is likely to be. You could assess this in a few ways:
- Its approach to gearing (borrowing money to invest).
- How concentrated or diversified its portfolio is.
- What it invests in.
- How volatile its share price tends to be.