Having a diversified portfolio can be one of the simplest ways to minimise your investment risk. With IWeb Share Dealing you can trade a wide range of investment options.
Trade shares on the London Stock Exchange and six other world markets such as New York, Brussels, Frankfurt, Paris, Milan and Amsterdam.
Funds can give you exposure to a much wider range of investments than you would be able to obtain as an individual. You can trade in specific funds which will spread your money between different sectors, indices or geographic locations which can help to reduce the risk involved in stock market investing.
As funds may include many different investments, the risk of each individual asset underperforming is spread which reduces your overall exposure. That’s not to say that funds can’t go down in value – they can and you could still lose some, or all, of your initial investment. For example, funds can invest solely in shares which means if the share price of one of the companies invested in drops, your fund’s performance will be affected. However, as your investment is spread across a number of companies, your overall risk is lowered.
As funds are professionally managed, they do have management and administration costs which will reduce your return through charges on the fund. These charges do vary between funds so make sure you find out all of the charges involved in a fund before you invest.
Investment Trusts are companies that invest in the shares of other companies on behalf of investors. Investors' money is taken and pooled together by a professional fund manager who will then purchase stocks and shares in a wide variety of companies.
As Investment Trusts are professionally managed, they do have management and administration costs which will reduce your return through charges on the fund. These charges do vary between funds so make sure you find out all of the charges involved in a fund before you invest.
An ETF (Exchange Traded Fund) can track a stock market e.g. the FTSE 100, a commodity, bonds, or a basket of assets. They are similar to Funds as they allow you to potentially own a larger range of assets within the one investment. ETFs trade like ordinary shares and so the price will change throughout the day as they are bought and sold.
Corporate Bonds are essentially loans made to companies from investors. The bonds are usually issued by companies as a capital raising exercise.
Gilts (Gilt Edged Securities) are government issued bonds which pay a fixed income. At maturity the bond is bought back by the government at face value.
Preference shares are traded on the stock market like ordinary shares however they pay a fixed dividend. Since the dividends are fixed an investor would be protected if a company's profits fell however they wouldn't benefit from any profit increases either.
As well as the London Stock Exchange you can trade shares on 6 other international markets, find out more about trading on these stock markets.
We don't provide advice so if you are in any doubt about making your own investment decisions we recommend you seek advice from a suitably qualified financial adviser.