Shares, bonds and cash: understand the asset labels

Shares describe ownership

MoneyHelper explains that a share is a stake in a company. Its value can change, and returns may include dividends or a gain or loss when sold. A share label does not promise either income or growth.

Keep the wording from your own fund document. If it says equities, ask whether that means company shares in this context and which holdings the description covers. A broad label is a starting point for understanding, not evidence of a personal investment choice.

Sources: MoneyHelper: A beginner’s guide to investing

Bonds describe lending

MoneyHelper describes bonds as lending to a company or government. It also explains that fixed-interest investments can fall in value when interest rates rise. A bond label is not a promise that its price will stay unchanged.

For a bond fund, request the current fund description rather than treating the word bond as a complete risk explanation. Keep questions about the type of lending and the provider’s stated risks with the source document. This guide does not grade issuers or recommend buying bonds.

Sources: MoneyHelper: A beginner’s guide to investing

Cash and purchasing power are separate questions

MoneyHelper describes cash deposits in bank or building society accounts. It warns that inflation can reduce buying power when the interest paid does not keep up with prices.

If a pension document uses cash or a similar label, ask what arrangement it means; do not assume the label gives the same access rules as your everyday account. Keep pension access questions with the scheme information. This guide does not compare deposit protections or treat a fund label as proof of protection.

Sources: MoneyHelper: A beginner’s guide to investing

The label does not select an allocation

Investments can fall as well as rise. Past performance does not predict future returns. These explanations do not put assets in a recommended order or prescribe how much to hold.

Use the fund and allocation guides to organise document questions. The inflation tool can illustrate an assumed change in prices; it does not establish a current inflation rate, a safe asset or a suitable pension strategy.

Sources: MoneyHelper: A beginner’s guide to investing

Keep learning

• Investing and pensions: understand what you hold →
• Investment funds: the fund and the pension are different →
• Asset allocation: understand the recorded mix →
• Pension investment risk: understand the questions →
• Inflation and buying power →

Browse all investing guides →