{"id":514089,"date":"2026-07-07T12:30:15","date_gmt":"2026-07-07T12:30:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/514089\/"},"modified":"2026-07-07T12:30:15","modified_gmt":"2026-07-07T12:30:15","slug":"how-to-grow-your-money-sensibly-part-two","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/514089\/","title":{"rendered":"How to grow your money sensibly: Part two"},"content":{"rendered":"

Last week John Lowe of MoneyDoctors.ie looked at basic investment planning and proven investment strategies in the first part of his guide<\/a> to growing your money.<\/p>\n

In this week’s part two, the financial expert looks at the various types of investment where long term actually means long term.<\/p>\n

Pooled Investments<\/p>\n

A pooled investment \u2013 sometimes known as an investment fund \u2013 is a way for individual investors to diversify without necessarily needing much money.<\/p>\n

Your money \u2013 along with the money of all the other participants \u2013 is pooled and then invested. Each pooled investment fund has different, specified objectives. For instance, one might invest in the largest Irish companies, another in UK companies, a third in US gilts and a fourth in looks at the various tech and energy stocks. In each case the fund managers will indicate the type of risk involved.<\/p>\n

They will also provide you \u2013 on a regular basis \u2013 with written reports or statements explaining how your money is performing.<\/p>\n

\"\"<\/p>\n

Since it would be impossible for all but the richest of private investors to mimic what these pooled investments do, they are an excellent way to spread your risk. A typical fund will be invested in a minimum of 50 companies and will be managed by a professionally qualified expert.<\/p>\n

The fund managers make their money from a combination of commission and fees:<\/p>\n

There is often an entry fee of up to 5% of the amount you are investing, though with an insurance company, there are no entry fees.
\nThere will definitely be an annual management fee \u2013 usually around 1.5% of the fund total at the end of each year.
\nIf you want to sell your share in a pooled investment, you may also be charged a fee.<\/p>\n

A couple of other points before we look at all the options in a little bit more detail:<\/p>\n

1. The funds described below are all medium to long-term investment vehicles. In other words, you should be thinking about leaving your money in them for an absolute minimum of five years \u2013 and more like ten years or even longer.<\/p>\n

2. Although past performance \u2013 as it always says in the small print \u2013 can be no guide to future performance, it is still useful to know. One thing to note is who is making the actual investment decisions and how long they have been doing it for. If the individual manager of a fund has changed recently, then the past performance may not be so relevant.<\/p>\n

\"Senior<\/p>\n

I include several different types of investments in this category:<\/p>\n

tracker bonds
\nunit trusts and other managed funds
\nwith-profits funds
\nstock market ‘baskets\u2019 (or guaranteed stock market active funds).<\/p>\n

This is because all of them are what I would describe as \u2018tailor-made investment vehicles\u2019. That is to say, they have been specifically designed to meet the needs of ordinary, private investors. This is in direct contrast to, say, untailored opportunities \u2013 such as buying a publicly quoted share or an investment property \u2013 which aren\u2019t aimed at any specific group of investors.<\/p>\n

Tracker bonds<\/p>\n

This is a fund that guarantees to return your initial investment plus a return based on a specific stock market index or indices. For example, it might give you all your money back after five years plus 80% of any rise in the FTSE 100.<\/p>\n

Unit trusts<\/p>\n

Your money is used to purchase \u2018units\u2019 in an investment fund. The price of the units will vary according to the underlying value of the investments. For instance, if the unit trust specialises in European technology shares, then it is the value of the shares it holds which will determine the price of the units.<\/p>\n

You can sell your units at any time, but you should be wary of buying and selling too quickly, as charges and fees can eat up your profit.<\/p>\n

\"Beautiful<\/p>\n

Unit-linked funds<\/p>\n

As above, but with the added element of a tiny bit of life insurance so that they can be set up and run by life insurance companies.<\/p>\n

Managed funds<\/p>\n

Again, these are \u2013 in essence \u2013 unit trusts. The term is used to denote a fund which makes a wide spread of investments \u2013 thus theoretically reducing the risk \u2013 though you should not assume that this is the case. I particularly like Irish Life\u2019s Multi Asset Portfolio (MAPS) Standard Life\u2019s MyFolio Active funds, and Zurich\u2019s Prisma funds.<\/p>\n

The European Securities Marketing Authority (ESMA) is the authority who categorise every stock share and company in the world into seven separate risk categories from 1 to 7. The lower the number, the lower the risk (cash, government bonds) and vice versa: 7 covers emerging markets, 6 covers technology and energy stocks, BRIC countries etc.)<\/p>\n

Most people are rated around 3 or 4. All insurance companies have managed funds and most do not bother with 1 or 7 as they are deemed too extreme, so essentially, you only have 5 funds to choose from.<\/p>\n

With these, you don\u2019t have to worry about individualising your stock selections. You just stick to your “lanes” depending on your attitude to risk with access to free swaps should you wish to move.<\/p>\n

Specialised funds<\/p>\n

A fund that concentrates on a very specific market opportunity \u2013 such as oil shares or companies listed in an emerging market. This is obviously riskier, but if the underlying investment performs well, then you will make above-average returns.<\/p>\n

\"a<\/p>\n

Indexed funds<\/p>\n

This is a fund that aims to match the overall market performance. For instance, you might have a fund that plans to achieve the same return as the UK\u2019s leading 100 shares (FTSE 100).<\/p>\n

With-profit funds<\/p>\n

These funds are run by insurance companies, and they guarantee a minimum return plus extra bonuses according to how the fund has performed over the longer term. These bonuses might be added annually (annual bonus) or when the fund is closed after the agreed period of time (terminal bonus). The terms, conditions, objectives and charges for these funds vary enormously.<\/p>\n

Stock market \u2018baskets\u2019<\/p>\n

Investors or their advisers choose a number of stocks, which can range from blue chip shares (such as the big banks and retail groups) to downright risky stocks. Depending on how risk-averse you are, a percentage of your \u2018basket\u2019 will be conservative solid choices, while the smaller percentage will be a little bit of a gamble.<\/p>\n

‘Diversification’ is again the buzzword \u2013 the greater the spread or choice of stocks, the softer the fall if there is to be a fall.<\/p>\n

Specialised Stock Market Strategies<\/p>\n

Futures, options, hedge funds, exchange-traded funds, derivatives, contracts for differences (CFDs) and the like all form part of the specialised investment sectors of the stock market. Good, solid advice is essential if you wish to participate in this area \u2013 not for the faint of heart.<\/p>\n

Alternative Investments<\/p>\n

There is a large number of alternative investment options, all of which come with varying amounts of risk. Some, such as gold or other precious metals, are easy to buy and sell. Others, such as art, may have a limited market, making them difficult to find a buyer for when you want to dispose of them.<\/p>\n

\"\"<\/p>\n

Examples of alternative investments include:<\/p>\n

paintings and other art
\nantique furniture and other objects
\ndebentures at Wimbledon
\nrock memorabilia (\u00e1 la the Jerry Lee Lewis jacket \u2013 one of 25 made for his biopic Great Balls of Fire \u2013 displayed in my Stillorgan office)
\ngold and other precious metals
\ndiamonds and other precious gems
\nwine
\njewellery
\ncollectibles such as rare stamps, coins, classic cars or watches.<\/p>\n

In general, alternative investment is \u2018direct\u2019 \u2013 this is to say, you purchase the actual items. Specialist knowledge is vital if this is to be a genuine investment and you should not consider alternative investments until you have a reasonably high net worth and a portfolio of more conventional investments since the risks can be high. Always seek professional independent advice.<\/p>\n

The views expressed here are those of the author and do not represent or reflect the views of RT\u00c9<\/p>\n

For more information, click on John Lowe’s profile above or on his website<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Last week John Lowe of MoneyDoctors.ie looked at basic investment planning and proven investment strategies in the first…\n","protected":false},"author":2,"featured_media":514090,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":["post-514089","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/514089","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=514089"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/514089\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/514090"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=514089"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=514089"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=514089"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}