man working out finances

Nuts and bolts
of investing

"Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas." - Paul Samuelson*

Wise words Mr Samuelson! That’s because you should only think about investing if you can put your money away for at least five years and are comfortable taking risks with your money.

But time isn’t the only ‘nut’ to think about when it comes to investing. Here we’ll walk you through some of the things you should think about, so you can go in with your eyes wide open.

Step 1 - Think about what you want to achieve and by when

Set your financial goals
Deciding what you want your investment to achieve and when is important, because it’ll help when making decisions about where to put your money to achieve your financial objectives.

If you have a goal you want to achieve in the medium or long term (5 years or more), for instance, paying for your child to get through their uni days, or saving for retirement, then you might want to consider investing over saving.

That’s because, investing over the long term could give your money a better chance of smoothing out the ups and down of the stock market and getting returns above inflation.

Got emergency funds?
Before investing you should consider whether you have sufficient emergency funds you can quickly and easily get your hands on to cover those unexpected curve balls life occasionally throws at us. If not, think about saving in a bank or building society account rather than investing.

Step 2 - Risk versus reward, getting the balance right

When you invest, a good rule of thumb is the more risk you take, the greater the potential for reward but on the flipside, there's a greater chance of losing more (or all) of your money.

Taking less risk with your investments means your returns are likely to be lower, but you're also less likely to lose as much as you would if you'd chosen a riskier investment.

But there’s no such thing as risk-free investing.
You need to consider:

  • how much risk you’re comfortable taking bearing in mind you could lose some or all of the money you have invested,
  • what level of risk you need to take to achieve your financial goals,
  • how much you can afford to lose without affecting your lifestyle.​

Step 3 - Where might you invest?

You’ve a huge array of choice when it comes to investing. If you’re an experienced investor, you might consider investing directly in the stock market, in commodities such as gold, or collectibles such as art, or fine wine.

But these types of investments aren’t for the inexperienced or faint hearted. Most of us prefer to invest in products through funds which pool money together with other investors. These funds usually invest your money in ‘assets’ and are professionally managed by a fund manager.

Types of assets

There are 4 main types of assets and each one carries its own particular risks and level of potential return.

This is money held on deposit (e.g. cash in a bank or building society account).

The risk level is much lower than other assets, but so are the potential returns – especially when you consider the effect of inflation. While cash held in savings is generally secure, the impact of inflation will reduce the buying power of your money over time. For instance, if inflation is 2.5%, then in 10 years’ time £10,000 will only buy the same as £7,810 today.


Fixed interest (Bonds and gilts)
These are issued by the government and by companies to help them borrow money. In return, they agree to pay a fixed rate of interest over a set period.

Investing in these types of assets tends to produce lower but more stable returns than equities. However, over the long term they may also give a lower return than equities. With this type of asset inflation is a key consideration, especially if it’s running higher than the amount of income produced.


This is money invested in commercial property that aims to deliver rental income as well as capital growth. However, investing in property is usually more suitable over the long term because this type of investment has the potential to fall sharply in value and this gives it more time to recover.

You also need to consider that you might not be able to get your hands on your money very quickly as the property may have to be sold first to release the cash.


Equities (Shares)
This is money invested in companies through equities (shares) where the growth depends on several factors including how well those companies perform. Different equities carry different risks and levels of risk also depend on the company invested in.

Investing in equities is likely to offer the greater potential for higher returns over the long term (10 years or more) but also have the greater potential to change in value meaning you could lose some of all of your money.


Step 4 - Choosing a fund

The key to investing is to put your money away for at least 5 years and to get a spread of assets so you’re not over exposed to just one. The Zurich Horizon Multi-Asset fund range allows you to choose a fund which invests in all asset types within one multi-asset fund.

These funds reflect a range of risk attitudes from Cautious to Adventurous so you can choose a fund that reflects how much risk you want to take with your money.

It’s about finding the right balance for you.

Each of the Zurich Multi-Asset funds reflect a different risk attitude from Cautious to Adventurous so you can choose a fund that reflects how much risk you want to take with your money.  For instance, someone willing to take higher risks for potentially higher returns might want a larger portion of equities. Those wanting to reduce risk might select a fund with a high portion of cash or bonds.

It’s about finding the right balance for you.

Zurich Horizon Multi-Asset Funds

Take a look at the Zurich Horizon Multi-Asset fund range to find fund factsheets showing which assets each fund invests in. bear in mind, with all of these funds there's a chance you could lose some or all of your money.

Don't forget to regularly review your investment!
There may be times when you want to take less risk (known as ‘de-risking’), especially if you’re approaching one of your financial goals and you’re running out of time to recoup any loses from sudden falls in value.

One way of ‘de-risking’ to help protect any growth your fund has made is to switch some, or all, of your fund into a lower risk fund or cash.

What next?
So now you know your asset from your elbow, and understand a bit more about the nuts and bolts of investing, find out if it's right for you!

Is investing right for me?

*Paul Samuelson was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences.

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