Ordinary people are literally the regular customers of most financial investment planners as they have not the skills and profession in such fields. That is when they need to seek help from financial professionals who could provide investment advices to assist them in the investment industry. Understanding the types of investment is quite a necessity to help you look for the most suitable planner.
Basically there are two types of investment plan – direct and collective. Direct investment consists of the gilt-edged stock or known as government-issued bonds and the shares of a specific company or also known as issued bonds. Company shares may somewhat encounter regular price fluctuations as they are traded in the stock market and the performance of the company will influence the dividends entitled to you as part of the share owners. Gilts issued by government, however, offer a fixed rate of interest where full return is assured once the bond reaches the maturity deadline.
This concept resembles a loan you are giving to the government and due to the built-in certainties; such investments are subjected to lower risks although the return may be lower than the volatile share markets. In fact, both the corporate and government investment bonds can be traded in the stock market, anytime before they mature. But if such actions were taken, the price will flow accordingly to the prevailing stock market rates instead of the fixed interest.
Another type is the collective investment plan. This is where you spread your investment into several different investments by pooling it with other investors. This type of investment can reduce the risks and usually, the pooled investments are managed under a professional fund manager, who decides the types and range of investments.
There are investment trusts, unit trusts and the Open-ended Investment Companies (OEICs) to choose from and to avoid rash decisions; this is when you can seek advice from independent financial investment planners. You should take the financial investment advice wisely as the sheer range of investment channels may mislead you to great risks. Disregard of how accurate your intuition may be, the best advice should come from a professional financial adviser.