Investing with confidence
If you're new to investing, this section aims to help you understand the difference between saving an investing and gives you an overview of the different types of investments that may be available to you from Aviva.
Saving vs Investing
- Investing is about trying to make money grow over the medium to long-term. The returns can be higher than with savings products, but it's riskier than saving and you could lose money.
- Aviva offers two savings and investment products that give your money the potential to work harder than it does on deposit:
Regular Saver for those saving monthly (who may have lump sums to invest along the way)
Investment Bond for those with lump sums to invest who want to invest for income, growth or both
- Saving is about putting money aside for later. Savings products like bank, credit union or post office accounts usually pay interest, but this might not keep pace with inflation, so your money may lose value in real terms over time.
When you invest with Aviva you invest in a fund
Investing directly into different assets, such as company shares, can become costly and difficult to manage. When you take out an investment, saving or pension product with us, you invest in a fund. By investing in a unit linked fund you pool together your contributions with contributions from other investors. Therefore, you share the costs and benefits of investing.
What type of investor am I?
Before investing you need to decide how comfortable you are with investment risk and the level of risk you’re willing and able to take with your own money. Our risk profiler may help you with this. Of course we’d recommend you speak with your financial broker before making any financial decisions.
Use our Risk Profiler to answer simple questions to help identify your attitude to risk.
What types of funds are available?
There are a few different types of funds available through Aviva:
- Target return: In recent years, many investors have turned to target return funds. This is a way of investing that aims to generate positive returns in all market conditions. It uses investment techniques that can profit from both the ups and downs in markets and share prices. For many, target return investing has come to be seen as an integral part of their portfolio. Please note that there are no guarantees a target return fund will achieve its objective.
- Target income: In today’s exceptionally low interest rate environment, consumers are forced to either accept high levels of risk to generate a decent income from their investment, or accept very low income. A target income fund may be a good alternative. These funds aim to generate regular income regardless of the market environment. They use investment techniques that can generate income whether markets rise or fall. Please note that there are no guarantees a target income fund will achieve its objective.
- Multi-Asset funds: Multi-Asset funds invest across a number of different asset types which may include equities, bonds, property, cash and alternatives. This gives you a greater degree of diversification than investing in a single asset class. Diversifying across a broad range of asset classes, styles, sectors and regions can help cushion against any shocks that come with investing in a single asset class. It also enhances the potential for investing in a better performing asset class, while spreading the risk of investing in lower performing asset classes. However, investors should remember that diversification does not fully protect you from market risk.
- Cash: These funds typically place money on deposit at banks or in money market securities that pay a variable rate of interest. These types of funds offer the least risk, with little volatility, but offer the least potential for profit. They are largely influenced by the prevailing interest rate environment and inflation and charges may erode the returns they provide to you.
- Bonds: Fixed interest or bond funds invest predominately in bonds that are issued by governments and/or companies as a way of borrowing money. Effectively by investing in a fixed interest fund or bond fund, you are lending money to a variety of governments and/or companies. The loan is due to be repaid at a future date but in the meantime the governments and/or companies pay interest on the loans and this interest is added to the fund. Because these funds are loans to governments and/or companies they are typically less risky than investing in equities. However, the long term returns are likely to be lower and there is a risk that the value of your investment could fall.
- Equities: Equity funds invest across a range of different company shares, such as Apple or Nestlé. Equity funds have the potential to make money in two ways:
1. They can receive capital growth through increases in the share prices of the companies they invest in, and
2. They can receive income in the form of dividends from the companies they invest in.
They offer the greatest potential for both gains and losses. Share prices are impacted by a number of economic and company specific factors. These usually reflect the market’s perceived value of a company. Share prices rise and fall on a daily basis based on investor demand. This means that the value of your investment can go up or down, often quickly and often by significant amounts. That’s why equities are considered long-term investments and their performance is not guaranteed. Some of our funds only invest in certain regions - others invest in companies all over the world.
- Property: In a property fund, investors’ money is pooled to purchase a range of different properties. The investment return from property comes from capital growth and rental income. These funds may also have holdings in property related securities such as Real Estate Investment Trusts (REITs) and cash instruments. REITs are companies that sell like a stock on a major exchange and invest in real estate directly. Investing in REITs can offer a more liquid, dividend-paying means of participating in the real estate market than investing directly in property. There are broadly three sectors in the commercial property asset class. These include:
1. Offices: headquarter buildings, high rise blocks, business centres and science parks.
2. Industrial: workshops, factories, warehouses and distribution centres.
3. Retail: shops, showrooms, shopping centres, supermarkets and restaurants.
Important: The cash weighting in our property funds depends on a number of factors and may vary over time. The cash proportion of the funds can be significant while the fund managers are seeking suitable investment opportunities. Withdrawals and switches from funds investing directly or indirectly in property may be deferred for up to 6 months. Property funds may have liquidity and concentration risks which are not captured by their risk rating.
For more information on the operation, risks and benefits of investing in our funds please contact your financial broker or read our Your Investment Options - Aviva's Fund Guide.
|Warning: The value of your investment may go down as well as up.|
|Warning: If you invest in this product you may lose some or all of the money you invest.|
|Warning: Past performance is not a reliable guide to future performance.|
|Warning: This product may be affected by changes in currency exchange rates.|