Can I Invest in Multiple Investment Funds?

Ask the Expert

“I’ve been thinking about putting my money into stocks and shares, but I’m not sure how to go about this. Should I invest in one or two companies, or should I spread it around more?”

Carl responds:

You can invest into companies through direct shareholding, e.g. shares in Marks & Spencer. However, a more common way to invest is indirectly through an investment fund. This is where your money is pooled with other investors’ money and spread across a variety of different investments, helping to reduce the risk that you would have through a concentrated shareholding.

It is important to remember that investing in stocks and shares always comes with a degree of risk – the value of your investment can go down as well as up and in general, you should consider this sort of investment as a long-term venture.   You must decide how much risk you are comfortable with, how long you want to invest for, and any income or access requirements you have.

Pooled investments are managed by a professional investment manager.  They can invest in one or more different asset classes and will offer different strategies and risk levels to investors.  They will monitor the fund performance and change the underlying assets according to the fund’s objective (typically to generate income, growth, or a mixture) and risk profile.  Generally speaking, the higher the risk profile, the greater the potential for both returns and losses.

Choosing funds is not an easy task and is best suited to professionals.  Before investing your money, you must understand any risks, costs, and other features so you can make an informed decision. I recommend that you seek independent financial advice to help you identify your investment goals and to build an investment strategy that meets your needs.

Any opinions expressed do not constitute advice.  The value of your investment can go down as well as up and you may get back less than the amount invested.  The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.