Many people use a bank or building society deposit account to save. However, saving in this way only provides a small amount of interest, particularly at current interest rate levels, and no capital growth.
By contrast, investing in the stockmarket over the long term has historically outstripped the returns provided by a bank or a building society and so may provide a better way to meet your investment objectives.
When you buy equities, also known as shares, you are buying a part of the company. All companies are subject to market forces, such as competition and external market forces, and their share prices can grow or decline as a result. This means that your investment will grow or decline in line with the share price of the company. Equities can enjoy higher returns in the longer term than other investments such as bonds or cash, but they may also be subject to higher risk.
When you invest in an M&G equity fund, you’re investing in all the companies held within that fund. The risk of investing in the stockmarket is therefore reduced because your investment is spread across a number of companies rather than being held in just one company.
Up to £85,000 of your money is secure in a bank or building society through the Financial Services Compensation Scheme, unlike stocks and shares or fixed interest investments which are less secure.
The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.