The most important thing to remember if you choose to invest is that your capital is at risk. What do we mean by that? Simply put, this means the value of your investment could potentially go down, as well as up. This is especially true in the short-term.
What About Investment Funds?
At Plum, we offer a range of mutual funds. These funds are financial vehicles, often operated by professional money managers. This allows people to contribute their money into a shared pool. The money is then invested in a combined portfolio of shares, bonds, or any other financial instruments 👨👩👧👦
A mutual fund will typically hold a portfolio containing hundreds of different securities at any time, so the risks are spread. The theory is that if one company in the portfolio has a bad quarter, you don't stand to lose a great deal because only a small proportion of your overall investment is tied to that specific company.
Nevertheless, if the overall market has a poor year your share can still lose value, and you can get back less than you put in. The nature of the stock market means that the value of shares can fluctuate a lot in the short-term. Thus, it only makes sense to invest over a longer period.
When looking at investment performance, it’s important to remember that historical returns are not a good predictor of future results.