Having large sum of money or some spare money each month is a nice feeling. But what are you going to do with it? You could spend it, save it – or invest it. If you want to invest it, you’ll want to understand what that means.

The first thing to understand is that there is a risk with almost every type of investment. It may just be a small risk, but you should be aware of it all the same. And with some types of investment there’s no guarantee that your money will grow or even that you’ll get it all back.

Investment plans generally invest in at least type of ‘asset’ (such as equities or bonds). The amount of risk involved will depend on what type of asset or range of assets you’re invested in.

Even within the same asset class there can be different levels of risk. The shares of large companies, for example, are generally thought to be less risky than smaller company shares.

If you invest in funds or shares that are in a different currency, such as euros, yen or US dollars, the value of these funds will change if there are changes in exchange rates.

Some types of investment plans have features that reduce risk. They can do this in different ways, such as investing in a wide range of different types of assets or just investing in those asset classes with a lower level of risk.

The level of risk you’re prepared to take will be very much an individual choice. Companies which sell or advise on investment products will give clear warnings of the risks associated with them.

• Why invest?