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Savings accounts can offer 100% capital guarantee and ease of access. However, if interest rates are low, or are being outpaced by inflation, savers could be in a tight spot and have to make their money work harder to generate a real return. Holding or moving to cash will help avoid short-term stock market volatility, but it means you will lose out on any potential market gains over the long term. As you can see in the return example, multi-asset funds stack up well when it comes to returns over a long time period.
For short-term goals, the general rule is to save into cash deposits, like bank accounts.
$50,000
invested in savings account
$54,062
Annualised rate of return of 1.6%
For longer-term goals, you may want to consider investing with multi-asset funds because inflation can seriously affect the value of cash savings over the long term.
$50,000
Global multi-asset portfolio (for illustrative purposes only)
$62,749
Annualised rate of return of 4.6%
We believe that over the long term, investing and saving can complement one another. For many people, this combination is potentially a way to achieve their long-term financial goals. And if you do decide to invest remember one thing above all: diversification can help spread the risk to your capital. Don’t put all your eggs in one basket.
Past performance is not a guide to future performance. The value of your investment and any income can go down as well as up and you may not get back what they originally invested. Fund charges that would be payable are not included and when included would have the effect of reducing the performance shown.
If you are considering a longer-term investment of five years or more, and are comfortable with the risks involved, then the next step might be deciding how to get started in investing. Learning the pros and cons of the world’s various markets and assets can be time-consuming and difficult. That’s why many people leave these decisions to experts. One solution could be to opt to invest in a multi-asset fund.
At AXA IM Select, we are experts in multi-asset, and we believe there are many benefits to investing in a multi-asset fund:
Multi-asset funds can provide investors with exposure to a broad range of asset types. You can further increase this ‘diversification’ by blending geographies and sectors.
Asset classes don’t tend to all fall in value at the same time. So multi-asset investors are, to some extent, more insulated from the highs and lows of individual asset markets.
Generally, multi-asset investing comprises complex asset allocation decisions supported by risk reduction strategies by a team of experts who collaborate to search for the best mix for your investments.
Selecting a multi-asset fund that matches your attitude to risk can be a good tool to help investors achieve their financial outcomes while ensuring they do not take on more risk than they are comfortable with.
And finally, multi-asset funds package a diversified, complex portfolio balancing risk and reward, but presented in a simple-to-understand way.
When you’re new to investing, getting started can seem like an uphill struggle. That’s why we decided to create a starter pack to help demystify the process and provide an introduction to the basics.
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Groupings of investments that have similar financial characteristics, each asset class carries its own set of risks and rewards. Investors’ investment goals, like their personal circumstances...
For investors, risk represents the chance that a particular outcome or financial gain differs from its expected return, however, it’s important to recognise that risk is an inherent part of investing...
A fund is a type of investment that enables multiple investors to collectively purchase securities, whilst retaining ownership and control of their shares. Similar to a listed company, a fund is owned collectively by its shareholders, with an investment objective and policy dictating what the fund manager purchases.
From year to year, it is difficult to predict which asset classes will be the best performers. Most investment specialists agree about the benefits of spreading your money across different investments. This diversification can reduce volatility, smooth out highs and lows in returns and help avoid unnecessary risk.
Only investing locally means missing out on opportunities offered by global markets. Better diversification, more investment options and reduced volatility are among some of the reasons investors should consider investing globally.
Both savings accounts and multi asset funds can offer benefits for investors. Over the long term, investing and saving can complement one another and potentially help towards achieving financial goals.
Instead of focusing on just one type of investment, multi-manager funds invest in lots of other single-focus funds. This can allow investors to choose a single fund that diversifies investments and combines the talents of many fund managers all in one.
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