Investing for growth

If you want to grow your money, you can invest in a fund that reinvests any profit to increase the size of the overall pot.

Reinvesting your money to allow it to grow over time is known as capital growth. It allows the fund manager to continue investing and potentially grow the fund further.
The chart shows the historical gains made from investing £1,000 in shares for 15 years with income taken out and income reinvested.  Click on chart to enlarge.
The three types of funds most often associated with capital growth are:

• Equity funds – investing in companies.
• Mixed asset funds – investing in a range of asset classes.
• Property funds – investing in bricks and mortar or property companies.

The risks and prospects for growth vary depending on the type of fund.

Equity funds

Share funds generate returns from dividends paid out by the company and rising share prices.

Mixed asset funds

Aim to spread your money across a range of asset classes. This is known as diversification and helps to spread the risk by not investing all your money in one area. The fund managers decide which asset classes they invest in, adapting appropriately to varying economic conditions.

Property Funds

Property Funds can invest in commercial or private property and property companies. They can be good for growth and they are suitable if you plan to invest for a number of years. Growth is achieved if property values rise, however over time value fluctuates so there is the potential to lose money.