Enjoy A Steady Income When You Follow Our Advice On Low-Risk Investment Funds UK

There are times when cash is king, but there are times when it isn’t. Cash can lose value for as long as inflation is kept at high levels, but it’s the only truly safe option for investors looking to set money aside. For investors who dislike risk but still want to protect their wealth, this presents a dilemma. 

However, there’s no need to worry! 

We at Pearl Lemon Invest can help you overcome this dilemma with our valuable advice on low-risk investment funds.

Contact us today to learn more about how we can help.

Business team discussing finance data
advisor and investor shaking hands over table wile woman sitting in office

Low Risk Vs High Risk Investments

Do you take on risk, or are you opposed to it as an investor?

Taking risks is not a good idea if you get upset easily. On the other hand, risk-taking won’t be a problem if you can handle it. A combination of high- and low-risk investments is frequently found in investment portfolios. 

Riskier investments carry a higher risk of loss, but they also carry a higher potential reward. On the other hand, low-risk investments are thought of as safer wagers that typically yield lower returns.

Both investment types will help advance your financial objectives.



The Best Low-Risk Investment Trusts Funds In The UK

If you’re uncomfortable with sudden changes in your investments, you should avoid equities. Therefore, choosing low-risk investment options is a wise choice. These are all low-risk, low-return investments, which makes sense, given that risk and return are inversely correlated.

Let’s get into it:

Discussing stock market data
African american young business man analyzing stock market value

Crowdfunding

Compared to stocks and shares, bonds are a type of investment that tends to be safer and less volatile. Consider them a middle ground between keeping your money in a savings account and investing in stocks in terms of risk. Similar to stocks and shares, they can be traded on markets.

Government securities are referred to as “gilts” in the UK and “Treasuries” in the US. When you purchase a bond, you make a loan to the issuer in exchange for periodic interest payments, or “coupons,” and the repayment of your original loan when the bond matures.

Because you know in advance the return you’ll get on your investment, bonds are also known as “fixed-interest securities.” From one bond to another, you receive a different interest rate. You can anticipate a higher interest rate on riskier bonds and a higher chance of not getting your initial investment back.

Government debt with a high credit rating from nations like the US and the UK, neither of which has ever missed a payment, is riskier than debt issued by businesses.

Young man analyzing graph stock market trading on digital tablet.

Money Market Mutual Funds

Money market mutual funds invest in short-term securities such as overnight commercial paper. Even the best money market funds typically have low yields; as of mid-September 2022, the best were above 2%, outperforming the average annual percentage yield (APY) on savings accounts.

In contrast to Treasury products and corporate bonds, money market funds provide investors with absolute liquidity: You can withdraw your money at any time, and they are essentially volatility-free.

Numerous banks also provide money market mutual funds. You can invest in money market funds through your bank even if you don’t have or don’t want to open a brokerage account.

Unit Trust

A unit trust is created under the trust law. A trustee is appointed to look after the assets and ensure that the fund manager acts in the beneficiaries’ best interests. Fund managers are tasked with investing the money per the fund’s objectives.

Each investor purchases one or more of the fund’s units to become a beneficiary. Investors can typically designate a beneficiary to receive their units in the event of their passing, and they can sell their units if they choose to reinvest their money elsewhere.

michael-frattaroli-234665-unsplash.jpg

The Net Asset Value, or NAV, of the assets, typically determined daily, determines the price for each unit. A unit trust is unrestricted, in contrast to investment trusts. As investors buy and sell units, the fund will increase and decrease.

The trust generates returns by investing in high-yielding assets, typically corporate shares, bonds, real estate investment trusts, and other assets. The fund will pay out any quarterly or biennial returns as either income or growth, and you can typically choose how you want your money. Bear in mind that losses are possible, as well as returns, which are not guaranteed.

 

Annuities

You can purchase annuities from insurance companies with some or all of the proceeds from your pension. They provide a guaranteed income over a set period or for life.

An annuity does not have to be purchased with money on pension savings. Annuity sales were, in fact, weak by historical standards prior to the Covid-19 pandemic. However, there is proof that sales are increasing once more.

Despite volatile markets and challenging economic conditions, insurers and financial advisors report that interest in annuities and the security they offer has increased this year.

pexels-photo-220453.jpeg
Investments. Young woman investor buys stocks on the stock exchange stock market from home

Maximise Your Returns With The Help Of A Professional

Though these low-risk investment funds allow you to lessen your potential losses, it doesn’t mean you should settle for less. With great knowledge and expertise, our professionals here at Pearl Lemon Invest can help you maximise your low returns. 

Book a call today to learn more!

FAQS

Although it’s a good idea to aim for contributing at least as much as your employer match, you can start with as little as 1% of each paycheck. A typical matching arrangement, for instance, is 50% of the first 6% of your salary that you contribute.

The objective of risk management for investments is not to minimise risk because a risk-free investment will typically not produce a high return. Instead, you want to maximise your profits without assuming more risk than you can handle.

For instance, a lower-risk fund might invest primarily in fixed-interest securities while still holding some equity. The risk would be lower if stocks were excluded, but the fund’s growth and ability to profit from your investment would be constrained.

Investors use diversification to control risk while making some higher-risk investments

Another crucial aspect of risk management is the duration of your investments. Your investments’ values will likely fluctuate over time, so it’s common for your portfolio’s value to rise in some months while falling in others. However, it is hoped that the value will increase over time. 

Therefore, if you’re investing long-term, you shouldn’t worry about short-term value drops because you should have enough time to make back your money plus some.