What is the best way to invest in gold - ETFs or gold miners?
Each method offers something different for investors
Investing is about taking risks that you're comfortable with.
Important information - please keep in mind that the value of investments can go down as well as up so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
It's important you understand and manage risk. This will help you steer clear of the more common investing mistakes. The first thing to learn is that risk isn't the same as volatility.
Volatility describes the natural rise and fall of markets - which isn't within your control. What you can control is the level of risk you're prepared to take when choosing your investments. This will depend on what your financial goals are, how long you want to save for and your personal circumstances.
The theory
Ultimately you need to choose a level of risk that you feel comfortable with. The higher risk, the higher the potential returns. The lower the risk, the lower the potential returns. You need to think about how long you want to invest for and your personal circumstances - before deciding which level of risk might help you achieve your financial goals.
How it works in practice
This example is for illustrative purposes only. In reality investments go up and down and charges apply. Past performance is not a reliable indicator of future returns.
Shares are at the higher end of the risk spectrum. But greater risk can lead to potentially greater returns. A balanced portfolio should include a mix of all these assets, rewarding investors for staying invested and riding out market ups and downs.
The theory
Inflation is a term that’s used to describe rising prices. It can erode the buying power of your money over time and is a risk to the value of your assets over extended periods. It’s particularly important to factor in inflation when thinking about your pension pot. Your investments need to rise by at least the rate of inflation in order to maintain their value in real terms over time – otherwise it’s unlikely that you’ll be able to maintain the lifestyle you want for yourself.
How it works in practice
According to the latest research from the Department for Environment, Food and Rural Affairs, the average person spends £28.23 on household food and non-alcoholic drink per week for year ending 2022.* As you can see below, an ‘average weekly shop’ will cost you a lot more down the line once you take inflation into consideration. If you want your pension to have the same purchasing power in the future as it does now, you'll need to take steps to mitigate the effect of inflation in the years to come.
The theory
No one can predict the future and that's particularly true of investing. It's impossible to know which asset class, country, continent or industry sector will perform best or worst in any given year. You can get lucky and pick the top performer one year. But the chance of you doing this consistently is pretty slim. It's much better to hold a mix of investments (the technical term for this is a diversified portfolio). Some will perform well at a time when others don't do as well, so they help to balance each other out to potentially give you a smoother ride over time.
How it works in practice
If you take a look at the animated chart you'll see that the top performer is different most years. If you only held government bonds, you'd have done very well in 2008 and reasonably well in 2018, but not so well for all the other years. Don't put all your eggs in one basket.
The theory
Over the year, markets rise and fall. This is only a problem if you need access to your investments at short notice and you're forced to sell after a fall in the market - as you'll be locking in your losses.
Having some cash set aside, ideally somewhere between 6-12 months of normal expenses, will allow you to wait out a market downturn and hopefully sell at a better time.
How it works in practice
This example is based on a balanced portfolio, but other variations would perform differently.
In the chart below, the blue lines show the returns each year from a balanced portfolio of shares and bonds.
The red dots show the biggest top-to-bottom fall for the portfolio in each year.
As you can see, even when there were substantial top-to-bottom falls within a year, this example of a balanced portfolio often managed to recover enough to post a positive overall return by the end of the year.
It's a good idea to keep some cash in reserve to cover any unexpected expenses so that you're not forced to sell any of your investments at short notice. This will help you avoid the worst falls.
Also known as stocks and shares, when you invest in equities you buy a small stake in a company with the aim of capital growth, dividend income, or a blend of the two. When you buy a share in a company, you’re actually buying a piece of that company. The investment return you earn depends on the success or failure of the company itself. Equity funds have the ability to invest in a range of companies, based on a particular fund manager’s expert insight and experience, spreading the risk across a number of holdings and accessing multiple opportunities on your behalf.
As an asset class, equities carry the greatest risk in the pursuit of reward. They can prove volatile in the short term.
The value of investments and the income from them can go down as well as up, so you may get back less than you invest.
Bonds are corporate and government loans with you playing the part of the lender, in exchange for interest payments over a set period. Through issuing a bond, a company or government can borrow money in exchange for paying a fixed interest over a set time period, along with paying the initial amount back at the end. When you invest in bonds you are the lender and benefit from regular payments over the life of the bond. You can also choose to invest in a bond or income fund or select a multi-asset income fund. These funds invest in various asset classes to generate an attractive income, diversified across a number of securities. The multi-asset approach also benefits from diversification among asset classes, with the intention of reducing the overall risk of the portfolio.
The value of investments and the income from them can do down as well as up, so you may get back less than you invest. For funds that invest in bonds, please be aware that the price of bonds is influenced by movements in interest rates, changes in the credit rating of bond issuers, and other factors such as inflation and market dynamics. In general, as interest rates rise the price of a bond will fall. The risk of default is based on the issuer's ability to make interest payments and to repay the loan at maturity. Default risk may therefore vary between different government issuers as well as between different corporate issuers.
A commodity is a basic good like steel or oil that is most often used in the production of other goods or services. You can invest in commodity funds, which will often include mining and production companies, or track the performance of a specific commodity in the world market through a specialised ETF. Their value fluctuates according to current market supply and demand, as well as views on their future prospects. You can invest in a range of commodity funds which focus mainly on those companies involved in energy, metals & mining and paper & forestry products.
The value of investments and the income from them can go down as well as up, so you may get back less than you invest.
Property funds often invest in commercial property rather than the residential market but you should still consider your house and any buy-to-let properties you own as part of your investment portfolio. Property funds benefit from the ability to invest in large commercial projects like shopping centres and retail parks. Fund managers can commit more capital to these properties and deal with fewer landlords than investing in residential schemes, as a result. Property funds also allow investors to invest smaller amounts than would be necessary to buy a physical asset.
The value of investments and the income from them can go down as well as up, so you may get back less than you invest.
Carrying the lowest investment risk of the five assets, cash can be a useful asset to hold within a portfolio for a number of reasons. First, its inherently low investment risk provides good diversification to riskier assets. Second, holding cash allows you to take advantage of market dips, investing at the low point. Third, easily accessible savings held in cash can cover sudden unforeseen circumstances, without having to sell better performing assets.
Important information - please note that Navigator is not a personal recommendation in respect of a particular investment. If you need additional help, please speak to an authorised financial adviser. You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals.
Our team of expert commentators will help you understand the world of investing, money and markets better.
Each method offers something different for investors
Ed Monk
Fidelity International
29 April 2025
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Ed Monk
Fidelity International
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Fidelity International
07 April 2025
Also known as stocks and shares, when you invest in equities you buy a small stake in a company with the aim of capital growth, dividend income, or a blend of the two. When you buy a share in a company, you’re actually buying a piece of that company. The investment return you earn depends on the success or failure of the company itself. Equity funds have the ability to invest in a range of companies, based on a particular fund manager’s expert insight and experience, spreading the risk across a number of holdings and accessing multiple opportunities on your behalf.
Potential benefits:
Things to consider:
The value of investments and the income from them can go down as well as up, so you may get back less than you invest.
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Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
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