Funds pool money put in by lots of different people, and invest the money to give those people a return. Different types of funds invest in different asset classes. Most funds will try to hold a wide variety of investments in their portfolios, so that they avoid having too much exposure to any single investments.
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The current low interest rate environment means that bond investors have to take more risk in order to gain an attractive return on their invested money. The current low interest rates also present a risk that if interest rates and inflation rise in the future, then bond prices may fall and portfolios could suffer losses.
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Investors who are looking for a steady income from their invested money can look at high-dividend shares as an alternative to bonds. Although equities may carry more risk than bonds, in the current low-interest environment the higher yield that they offer can make high-dividend shares attractive.
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Shares represent a partial ownership of a company. Companies sell shares to raise money to help finance their on-going business and growth. Investors typically receive dividends if the company makes money, and as the value of the business grows, so too does their partial ownership of the company.
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Foreign exchange is the trading of currencies. Different people need different currencies for lots of reasons - business, investments, overseas holidays - and sometimes they need to gain certainty about the exchanges that they will make in the future. Exchanges can be made today
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