When you choose to hold your money as Stocks, you’re investing in an index-tracking fund we’ve chosen — the iShares World Equity Index Fund, managed by BlackRock.
What’s the risk?
Your money is at risk whenever you invest — but in a fund that risk is spread. So if one company doesn’t do so well, your total investment can be less affected.
The iShares World Equity Index Fund has a risk rating of 6 out of 7. This is an industry standard rating for funds like this, with 0 being least risky and 7 being most.
The fund has this risk rating because it invests in company shares in the developed world, rather than less risky assets like bonds or cash. So while you could see good returns in the long run, the value of the fund may go up and down more often in the short term.
How does the fund work?
Index-tracking funds like this buy stocks in all the companies in an index. Indexes are hypothetical portfolios of stocks, used to represent different markets.
The fund we’ve chosen tracks the MSCI World Index, which represents the stock market of developed countries. So it buys stocks in the biggest companies in the world, like Apple, Microsoft and Tesla. The index has stocks in over 1500 companies.
When you put money into this fund, it’s as if you’re investing in all the companies in the MSCI World Index. And your investment will go up and down daily, depending on how the fund performs.
Making the decision to hold a Balance or Jar as Stocks
Even though the fund can produce good returns in the long term, this isn’t guaranteed. You should only invest if you’re comfortable with the possibility of losing some money and investment should always be regarded as long term.
Wise isn’t able to give you advice about investments. If you’re not sure whether investing in the index fund is right for you, you should speak to an independent financial adviser and/or conduct your own research.