Investment is inseparable from risk.  A balanced portfolio would therefore include investments from a range of risk profiles so that any unexpected event affecting one of them does not damage the whole portfolio.  As a general rule, money that may be needed in the immediate future should be in a low risk environment for ready access; longer-term investments justify a higher level of risk.

Risk is closely linked with the potential for reward.  Investors in shares anticipate better return on their money than they would get by simply depositing funds in a savings account.  In savings accounts (low risk), you accept a low return in exchange for the low risk involved.  If you take a risk, however small, you have the right to expect something in return; the more uncertain an investment is the greater the potential return you expect in compensation.

Bonds, unit trusts, investment trusts and ISA (Individual Savings Accounts) all offer pooled or collective funds that provide access to a wide range of investments.  Collective investments such as these offer much more security than would be available from buying shares individually, as the fund manager concerned would manage a share portfolio on your behalf, although there is no guarantee as to performance and capital security.

The funds will state the objective of the fund manager.  This description can be broad and range from a general description of capital growth to income or income and capital growth.  Alternatively, a fund may be specific to a geographical area.

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