Introduction to investing
You may think that investing is not for you.
‘I don’t have enough money to invest.’
‘I don’t know how it works.’
‘I don’t want to lose my life’s savings.’
The reality is, if you’ve got a pension or investment plan with us - including bonds, endowments, or a protection plan with a plan value - then you’re already investing, through the fund(s) in your plan.
What are funds?
A fund is a pool of investors’ money used to invest in a range of assets such as shares, bonds, or other securities. Instead of making individual investment choices, people investing in the fund rely on a professional manager to select and manage the investments on their behalf. The main aim is to grow the value of the fund or generate income, while reducing risk by spreading investments across different assets. They allow people to invest together and benefit from professional management and diversification. Unless an individual investor has a lot of money to invest, this diversification is normally out of reach without investing in a fund.
Fund Managers
Fund managers are financial professionals whose job it is to follow an investment strategy – each fund has its own investment strategy aligned to the overall objective for the fund.
Fund managers have extensive knowledge of the companies, markets and territories in which their funds invest. They use this expertise to decide on where to invest, in what amounts, and for how long. The fund manager keeps these decisions under constant review through continuing analysis, research and regular meetings with the companies in which the fund manager is making or considering an investment.
Fund characteristics
Different funds hold different types of assets – some hold shares (or ‘equities’), while others invest in bonds, property, or cash-based assets. Some funds hold several different types of assets together, while others invest in a particular geographical region or sector.
You can choose to invest in different types of funds to suit your requirements, investment objectives and attitude to risk.
Higher risk funds are likely to fluctuate more in value over time – their value can fall and rise more quickly leading to potentially higher gains or losses.
Choosing lower risk funds means your investment is less likely to rapidly change in value but would also be expected to grow in value more slowly. This brings a risk of inflation eroding the value of your investment if inflation is higher than the fund’s investment return.
While the value of assets does go up and down, history shows that markets tend to recover over time - the crisis caused by the COVID-19 pandemic being an example of markets falling, then quickly recovering. Investing is not risk-free, and the key is to take a level of risk you feel comfortable with. It’s important to remember whichever fund you invest in there’s a level or risk, and you could lose some or even a significant proportion of your money.
As a result, it is important to consider risk in the context of how long you’re able to invest your money for. The general rule is that the greater the potential for growth, the more risks you may have to take, and you should be considering investing for longer to see this growth.
Next steps
As Zurich customers, you can change which funds you are invested in at any time, from the range of funds we have on offer. There is no charge for changing the funds you are invested in.
Please see our pensions and investments sections for information on the funds available to you.
While we can offer you educational content like this to help your investment understanding, and information on how each fund is performing, ultimately you decide which fund(s) you invest in.
If you don't feel comfortable choosing, then you should consider contacting a financial adviser. If you don't have one, you can find one by visiting www.unbiased.co.uk. You’ll find reviews of financial advisers by visiting www.vouchedfor.co.uk. You may have to pay for any advice you receive.
The following articles provide more information about how investing works:
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