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Pooled investments

Pooled investments pool together the money from hundreds of investors into a fund, which in turn invests in the stock market. All are essentially similar, but there are different types. Fund managers offer:

• Unit trusts & OEICS
• Investment trusts

Life and investment companies offer:

• With-profits bonds
• Unit-linked bonds
• Guaranteed income and high income bonds
• Guaranteed equity bonds

Key pros and cons of pooled investments

Pros

• An expert will make the investment decisions for you and buy the investments on your behalf
• You still choose what type of investment you want - low-risk, one with guarantees, an investment in a particular sector or geographical region
• You spread the risks of investing. If you invest in just one or two shares and these do badly you will suffer. If you buy a pooled investment you get a stake in lots of different companies, which spreads the risk
• It can be cheaper to invest in pooled investments than buying individual shares as the costs are spread among all the investors
• You can often invest from £50 upwards a month

Cons

• Even professionals get it wrong
• You have to pay charges for someone else to manage your money
• As you are investing in the stock market, your investments can rise and fall, so you risk losing money

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