Pooled investments
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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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