Provides investment schemes and helps investors understand investment choices.
This guide from the Shell Contributory Pension Fund, produced in association with the Trustee's Adviser Aon Hewitt, is dated July 2013 and aims to help members understand the choices they have for investing their unit-linked Additional Voluntary Contributions (AVCs). It sets out a step-by-step approach, starting with thinking about your own situation and what you want your AVC investments to achieve, then explaining investment terms, asset types and the funds available.
The guide describes five kinds of risk — inflation risk, capital risk, low pension risk, conversion risk and concentration risk — and then covers the main asset types: equities, gilts and bonds, property, and cash/money market securities, including what each offers investors and the risks it carries. It closes with a note on the effect of currency on funds that invest overseas.
It is the risk that the returns on your investments may not keep pace with price inflation, so the money building up loses buying power and its real value falls.
Gilts are bonds issued by the UK Government; bonds issued by companies are known as corporate bonds.
Historically shares have provided higher long-term returns than bonds and cash, but they carry a greater risk of suddenly falling in value in the short term.
They are anticipated to achieve lower returns over long periods and may not keep pace with inflation.