There are an abundance of investment products available. Some people think about investing in an ISA, buying shares or purchasing a property and all of these can be wise Investments in the right circumstances.

With so many Investment products available it can be difficult to understand them. Here are three basic classifications of Investment products to make things easier...

Asset Classes - This is the way in which different types of investments are labelled. Similar types of Investment are grouped together. Four examples of Asset Classes include: Cash Deposits, Shares, Bonds and Property
Pooled Investments - Sometimes known as Collective Investments. If you opt for a Pooled Investment you will invest your money into a fund, which may be used to purchase various Investment products of different asset Classes. This fund is managed by a dedicated person known as a fund manager
Tax Wrappers - So named because you can wrap these products around your Investment and as a result benefit from either a lower rate of tax or in some cases avoid having to pay tax altogether.

Shares
One way to invest your money might be by buying Shares. The price of the shares of any company is determined by the Company’s ability to generate revenue and also by the value of its assets.

The value of the shares you buy may rise and fall depending on fluctuations in its revenue and in the value of its assets and of course on the predictions of the company’s future performance.

If you are interested in buying the shares of a Public Limited Company then you will be able to look towards the FTSE index and the Stock Market for your options.

If you would prefer to you could look towards the Alternative Investment Market, which tends to deal in shares issued by smaller companies and start up companies. Some people consider the Alternative Investment Market to be more risky.

Gilts
These are Bonds issued by the Government, usually when they have a budget deficit. If you invest in Gilts you are in effect lending money to the Government until an agreed date.

The Gilts you invest in will usually provide you with a fixed income, payable on a yearly basis. This is known as the "coupon". You should be aware that the amount you receive can differ, usually depending on interest rates.

At the end of the life of your Gilts you will receive your initial investment back.

Because they are Government backed, Gilts are considered to be of very low risk. The price of Gilts can differ.

Bonds
Bonds operate in a very similar way to Gilts, except that Bonds are offered by companies rather than the Government.

Once again, if you invest in a Bond, you may get a yearly income and at the end of your Bond’s life time you will receive your original investment funds back.

You need to be aware that as with most investment products, there is a risk that your Bonds will not perform as well as expected.

Pooled Investments
A Pooled Investment scheme will have a Fund Manager, who is responsible for investing your money in the right way so as to give you and the rest of the schemes investors the best possible return.

Some people prefer Pooled Investment schemes because of the involvement of a Fund Manager.

An example of two types of Pooled Investments....

Unit Trusts
With this type of Pooled Investment scheme you buy units. How many units you buy is your choice. The price and value of these units will depend on the value of the assets on which the units are based. If you choose to invest your money in a unit trust you may be given the option to buy more units as you wish and also to sell units back to the Fund Manager when you choose to.

Investment Trusts
When you put your money in Investment Trusts you are in fact purchasing shares. This is because Investment Trusts are structured in the same way as a company would be and as such their shares are issued in the same way.

Investment Products Explained - Find an IFA

Types of Investment