Equities

• Equities can increase significantly in value
  
  
• Dividends can increase as company profits rise - these can usually be reinvested or paid out as an income
  
  
• Equities tend to perform better than bonds, cash and property over the long term
  
  

• Equities can also fall significantly in value
  
  
• It's very difficult to predict what will happen in the short term 
  
  
• Dividends may be cut if the company faces difficulties

ShareNetwork, our share dealing service is a simple, good value way to buy equities. You'll also be able to see all your holdings alongside your funds on FundsNetwork.

Equity funds

The risks related to investing in equities can be reduced if you invest through an equity fund. A fund manager selects a range of equities so you are less reliant on the performance of any one company.

It also means that you don't have to choose the right companies to invest in yourself, but can rely on the knowledge and experience of the fund manager to choose companies which they feel will perform the best.

Most equity funds come into one of the following categories:

• Growth funds - these aim to achieve long-term capital growth. The fund manager selects companies which show the best potential for increasing their share price

• Income funds - these aim to generate an attractive income for investors. The fund manager will try to select companies that pay regular dividends. Their share prices tend to be less volatile than those of other companies.