<\/p>\n
There are a diverse range of funds that invest in different things, with different strategies \u2013 high income, capital growth, income and growth, and so on.<\/p>\n
Popular types of pooled investment fund<\/strong><\/p>\n Unit trusts and Open-Ended Investment Companies<\/strong> Underlying assets<\/strong> Buy or sell<\/strong> Higher returns<\/strong> Spreading risk<\/strong> Most unit trusts and OEICs allow you to sell your shares or units at any time \u2013 although some funds will only deal on a monthly, quarterly or twice-yearly basis. This might be the case if they invest in assets such as property, which can take a longer time to sell.<\/p>\n Investment length <\/strong> If you own shares, you might get income in the form of dividends. Dividends are a portion of the profits made by the company that issued the shares you\u2019ve invested in.<\/p>\n Taxed dividends<\/strong> For the tax year 2020\/21 the tax-free Dividend Allowance is \u00a32,000 a year.<\/p>\n Dividends above this level are taxed at:<\/strong> Any dividends received within a pension or ISA are unaffected and remain tax-free.<\/p>\n Basic rate payers who receive dividends of more than \u00a32,000 need to complete a self-assessment return.<\/p>\n<\/div>\n<\/div>\n Investing in different things, with different strategies Pooled investment funds \u2013 also known as \u2018collective investment schemes\u2019 \u2013 are a way of combining sums of money from many people into a large fund spread across many investments and managed by a professional fund manager.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/posts\/3248"}],"collection":[{"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/comments?post=3248"}],"version-history":[{"count":0,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/posts\/3248\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/media?parent=3248"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/categories?post=3248"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.generationwealth.co.uk\/news\/wp-json\/wp\/v2\/tags?post=3248"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nUnit trusts and Open-Ended Investment Companies (OEICs) are professionally managed collective investment funds. Managers pool money from many investors and buy shares, bonds, property or cash assets, and other investments.<\/p>\n
\nYou buy shares (in an OEIC) or units (in a unit trust). The fund manager combines your money together with money from other investors and uses it to invest in the fund\u2019s underlying assets.
\nEvery fund invests in a different mix of investments. Some only buy shares in British companies, while others invest in bonds or in shares of foreign companies, or other types of investments.<\/p>\n
\nYou own a share of the overall unit trust or OEIC \u2013 if the value of the underlying assets in the fund rises, the value of your units or shares will rise. Similarly, if the value of the underlying assets of the fund falls, the value of your units or shares falls. The overall fund size will grow and shrink as investors buy or sell.
\nSome funds give you the choice between \u2018income units\u2019 or \u2018income shares\u2019 that make regular payouts of any dividends or interest the fund earns, or \u2018accumulation units\u2019 or \u2018accumulation shares\u2019 which are automatically reinvested in the fund.<\/p>\n
\nThe value of your investments can go down as well as up, and you might get back less than you invested. Some assets are riskier than others, but higher risk also gives you the potential to earn higher returns.
\nBefore investing, make sure you understand what kind of assets the fund invests in and whether that\u2019s a good fit for your investment goals, financial situation and attitude to risk.<\/p>\n
\nUnit trusts and OEICs help you to spread your risk across lots of investments without having to spend a lot of money.<\/p>\n
\nHowever, bear in mind that the length of time you should invest for depends on your financial goals and what your fund invests in. If it invests in shares, bonds or property, you should plan to invest for five years or more. Money market funds can be suitable for shorter time frames.<\/p>\n
\nIf you have an investment fund that is invested in shares, then you might get distributions that are taxed in the same way as dividends.<\/p>\n
\n\u2022 7.5% (for basic rate taxpayers)
\n\u2022 32.5% (for higher rate taxpayers)
\n\u2022 38.1% (for additional rate taxpayers)<\/p>\n
\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"