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Decide which risk level is right for you
Slow and steady growth or higher rates of return? When deciding which outcome is right for you, the key factor to consider is time ie how long you plan to invest for
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Choose a fund
Our partners, Square Mile, the independent fund researchers, have selected funds aligned with three risk levels: cautious, balanced and adventurous
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Step 3
Read the factsheet
Each fund selected by Square Mile has an accompanying factsheet. For more insight on how to read fund factsheets and what to look out for, read our article.
Start investing in funds
How do you know where to start when there are so many funds to choose from?
As an investor, you can build your confidence over time and know what to look for but when you are starting out, it helps to have an independent research team on hand to do the heavy lifting for you. That is why EQi customers have access to research by Square Mile, a leading independent investment research company.
Square Mile has selected funds aligned with three levels of risk appetite: cautious, balanced and adventurous.
Which risk level is right for you
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Cautious
I have a shorter investment time horizon; I’m willing to invest for at least five years but at this point, I may need to realise my capital. I will take a small amount of risk, and I understand that this may result in lower returns.
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Balanced
I want to grow my money over time and I’m ready to take some risk in order to do so. I can invest for at least five to seven years, understand that there may be some bumps along the road but would prefer the journey not to be too rough.
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Adventurous
I am ready to take some risks with my money. I understand that adventurous investing may mean taking a bumpier path with the hope of higher investment returns at the end. Plus, I am prepared to commit to investing for at least seven to ten years.
Investment Risk Warnings
The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.
EQi does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.
The extent and value of any ISA tax advantages or benefits will vary according to the individual's circumstances. The levels and bases of taxation may also change.
The good thing about funds
Like shares, funds are not generic.
There are funds that aim for slow and steady growth as well as those that set out to be ambitious and seek higher rates of return. It means you can pick out funds that mirror what you are trying to achieve, and that’s where time is a factor:
- The more adventurous funds aim for higher growth but that almost inevitably means taking on more risk. It is why the path can be rocky, with falls in value that can be steep, which is why time is essential. If you think you might need to withdraw money in less than five years, it might not be enough time for the fund to hit its long-term aspirations.
- If you have a shorter time frame in mind, you can buy into funds that are cautious, which aim for steady growth, through moderate risk.
And of course, as your life changes, you can change which funds you invest in. For example, if you are approaching retirement, you can choose to switch to a cautious fund.
There are no guarantees when it comes to investment – no guarantees that you will get more money out than you put in, even if they have performed well historically. It’s why all investors need to think clearly about what to back, and why research matters.
Funds you may be interested in
Each of Square Mile's picks is a ‘fund of funds’ – literally a fund made up of other funds. Rather than just backing the assets in one fund, you get a slice of many.
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L&G Multi Index 4
Cautious
The fund aims to provide capital accumulation from a combination of income and growth over the longer-term whilst seeking to control risk.
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L&G Multi Index 5
Balanced
This fund invests predominantly into passive funds which has the benefit of helping the fund reduce its cost to investors.
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L&G Multi Index 6
Adventurous
On a risk scale of one to 10 (with 10 being the highest risk), the managers class this fund as a six.
Please note: Other funds with cautious, balanced or adventurous outcomes are available
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Rate of return
The graph shows the rate of return for the L&G Multi Index funds 4, 5 and 6 over five years*.
- The L&G Multi Index fund 4 delivered lower growth over five years but with a less bumpy journey
- The L&G Multi Index fund 6 delivered higher growth but the ups and downs were more pronounced
Insights
Funds: the basics
How to select a fund
Letting income funds do all the work
Investment trusts vs funds
Growth, income or preservation?
A simple guide to fund pricing
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07.04.20
Funds: the basics
06.04.20How to select a fund
02.03.20Letting income funds do all the work
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28.02.18
Investment trusts vs funds
24.02.20Growth, income or preservation?
17.02.20A simple guide to fund pricing
Good to know
These fund selections are provided to EQi by Square Mile Investment Consulting Research Limited, an independent research firm.
EQi does not receive a fee or commission should you invest in any of the funds, and neither does Square Mile.
The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.
Neither EQi or Square Mile provide advice or make recommendations about investments. If you have any doubts about the suitability of an investment, you should seek advice from a suitably qualified professional adviser.
*August 2013-November 2019. Source FE Analytics