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Some factors to consider before investing

There are some important factors you should consider when choosing how and where to invest your money:

Risk

What level of risk are you comfortable with? The level of risk is linked to expected return and generally the more risk with a particular investment, the greater the possible return. Some people are very uncomfortable with sudden, short-term fluctuations in the value of their investments. Others are more willing to accept short-term fluctuations with the expectation that long-term returns may be higher.

Return Expectation

Investors will generally expect to get the best returns they can, for a given level of risk. The key is to be realistic. Are you seeking modest, predictable returns or are you happy to endure fluctuations in your investments with the potential of higher returns in the long term. It is important to understand that on the basis of long-term historical performance figures, the returns for each asset class can vary significantly and this should be factored into any decision when selecting funds.

Time Horizon

What length of time do you want to invest for? Whether you have a short, medium or long-term investment horizon will impact on the option you choose. Often the investment objective will determine the duration, e.g. investing on behalf of young children is long-term, whereas investing for a deposit on a house would be typically short-term.

Access

What access do you require to your funds? A requirement for short-term access to funds will impact on your choice. Some products are best suited to investors who do not require access to their funds, who can afford to leave their funds invested for 5 years or more.