The very short and incomplete intro to types investments

Investments: shares, funds, bonds, cash, property, foreign currency, collectibles, commodities, contracts for difference (derivatives), etc.

Bonds: also called fixed interest securities, are loans to a company or government (the latter are also called gilts).

Shares: part of a company.

Funds: a specialist manager who pools the money from its investors to buy shares and others. Funds can invest in almost anything – shares, bonds, energy, gold, oil, debt, etc. All funds have a theme – anything from geography (European, Japanese, emerging markets), industry (green companies, utility firms, industrial businesses), types of investment (shares, corporate bonds, gilts), to the size of the company.

Investment Trusts: a type of fund. They're a closed ended investment that issues a fixed number of shares.

OEIC: "Open Ended Investment Company", a type of fund. Open Ended means shares are issued each time someone invests and you can buy or sell shares whenever you want. The size of the fund will grow or shrink to mirror this.

Unit trust: an open ended trust. The main difference between unit trusts and OEICs is that a unit trust is governed by trust law, whereas an OEIC is governed by company law. Technically, this means investors in a unit trust are not owners of the underlying assets, unlike investors in an OEIC. If you invest in a unit trust you buy units whereas if you invest in an OEIC you buy shares. The major difference between unit trusts and OEICs is the way they’re priced. Unit trusts quote a bid price and an offer price; OEICs only quote one price. With unit trusts, the bid price is the per-unit price you’ll receive if you sell your units back to the fund company. The offer price is the per-unit price you will pay to purchase units in the fund. The difference between the two prices is called the bid-offer spread. The spread aims to ensure new or redeeming investors don’t dilute the value of existing investors’ units. In this respect, OEIC are "better".

Tracker funds: the value of the fund increases or decreases in line with a stock-market index (a measure of how well the stock market is doing). Tracker funds often have lower charges than other types of fund.

ETF: exchange-traded funds, similar to tracker funds. They offer minute-to-minute pricing because they trade like a share, so might be more appropriate than tracker funds for investors who trade more frequently.

REIT and PAIF: a special type of investment trust (REIT) or OEIC (PAIF) that invests in property. REIT: real estate investment trusts; PAIF: property authorised investment funds.

ISAs (Stocks and Shares): a tax-free way of investing in shares or investment funds, up to an annual limit.

Investment bonds: a life insurance contract that is also an investment vehicle. You invest for a set term or until you die.

Endowment policies: a life insurance policy that is also an investment vehicle. It aims to give you a lump sum at the end of a fixed term. Often you choose which investment funds to have in your policy.

Whole-of-life policies: a way of investing a regular amount or a lump sum as life insurance. It pays out on death, and is often used for estate planning. Often you choose which investment funds to have in your policy.

Self-invested personal pension (SIPP): like other pensions, one of the key advantages of a SIPP is that any contributions you make, up to the amount you earn, are given basic rate tax relief. But remember that apart from a tax-free lump sum of up to 25%, you’ll have to pay income tax on money you withdraw from your SIPP in retirement. You should be careful not to tie up more of your money than you can afford: pensions can’t be accessed until age 55 at the earliest – and this will rise to 57 and over from 2028. Basic rate tax relief (20%) is claimed at source by your SIPP provider – so for every 80p you put into your pension, the Government will add 20p in tax relief to make it up to £1. If you’re a higher rate taxpayer, you can reclaim up to an additional 20% through your self-assessment tax return. What happens to your SIPP when you die?If you die before age 75, in most cases the whole pot can be passed tax free to your beneficiaries – either as a lump sum or as an ongoing income.If you die after you’ve reached age 75, your pension can be used to provide for your beneficiaries, but it will be subject to tax.