Everything you need to know about investing in unit trusts

Posted by admin
on March 16, 2020

What do you do when you just start earning for yourself? You may splurge all of it or treat your family to a nice dinner. Whatever may be the case, the feeling of receiving your first paycheck is unique and all of us get to experience it at some point. Once we start earning, our next concern is to manage expenses and find ways to save and invest. While most of us manage to save to some extent, we tend to be clueless about investing our funds.

For those of you who are new to the world of investing, putting your stakes in unit trusts could be the right thing to do. Why? Unit trusts are a combination of assets, which include a mix of shares among bonds, real estate, and other investments. These unit trusts are handled by fund managers. Unit trust investments are divided into units that are brought by various investors. So, for those of you who seem to lack a sense of direction in the field of investing, unit trusts could be a good investment option.

To help you make up your mind, here are a few things you should know about unit trust investments.

You get more investment opportunities

As discussed above, unit trusts involve a group of funds. And many investors pool in their money in these wide ranges of funds. Usually, when people start earning newly, they tend to have lesser funds available for investing. But in the case of unit trusts, you can invest along with others to enjoy the earnings from them collectively. So, you spend and earn together. You can also consider investing in the global market through unit trust investments.

You have less control over how your money is invested

Unit trusts are professionally managed by fund managers. In a way, you end up giving some of your autonomy over how your money is spent. You cannot ask your fund manager to invest in a particular fund. Your fund manager will invest in certain funds based on the firm’s expertise, market knowledge, and analysis. This can be a good thing, especially if you are new to the game. But if you are a control freak and believe in doing everything yourself, then maybe unit trusts aren’t your thing.

It’s not completely risk-free

No doubt you get to diversify your risk by investing in unit trusts, but that doesn’t completely eliminate all the risk from your investments. Market factors will impact the performance of the unit trust. There is a chance that you will get a negative return depending on the economy. This is something you will have to be prepared for and accept. With every investment, there is bound to be some degree of risk involved.

You will have to identify the best performing fund

Along with your fund manager, you can carefully determine the best performing fund for you based on the rate of returns, and awards and recognition. The return rate determines your gains and is calculated per annum as a percentage based on the fund’s performance in the market.

Most unit trust companies will post a fact sheet on their website, which details their fund performance to ensure transparency for the investors – with this, you can gauge your chances of a return.

Understand the different type of funds

There are also different types of unit trust funds you can invest in. Not all unit trusts are created equal, each fund is complemented with different assets. So, it’s best you understand the common types of unit trust funds available and how they complement your financial goals to know which to put your money in. Some common types of unit trusts involve equity funds, balanced funds, bond/fixed income, and money market funds.

With unit trust investments, you can be sure that your money is in safe hands. Your fund manager will always have the best interest of investors and will work to maximize your returns without you having to do it yourself.


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