Unit Trust? What The...?

what is unit trust?

when it comes to unit trust investment, most of our people begin asking, is it risky? is it a kind of MLM? is it a quick-rich scheme? and many more.

for me, the key word is simple. it's a kind of saving.

there's many kind of savings. savings is a fund of money put by as a reserve and protecting it from any source of danger. in this case, we define reserve as, something kept back or saved for future use or a special purpose, and danger as the causes of loss.

more than that, we should be wanting for more! it is because of inflation! each year, inflation rate averaged 4%. just imagine our monies' value would reduce 4% each year. if we save a buck today under our pillows, imagine how much the values in 30years time!

unit trust is not a quick-rich scheme, nor MLM or any kinda nonsense. it is a government-guaranteed activity. the very first private unit trust fund was launched in 1967. it became aggressive in the 1980s where bank-backed unit trust companies began to emerge. thus where Public Mutual began (that time known as KL Mutual). from 1990s onwards, many more unit trust companies emerged including PNB (where ASB, ASN, etc reside). na... get the clearer picture? unit trust and ASB (most visible one) are similar, in fact ASB is a kinda unit trust.

to double your money in 5-10 years in unit trust or to keep it safe and sound under your pillow or in the common bank, the choice is yours.

Unit Trust for Beginner

unit trust, mutual fund, amanah saham, whatever the term is, it's refer to the same thing. in UK, it's unit trust; in US, it's mutual fund; in Malaysia, it's amanah saham and unit trust is widely used in this country as well.

the unit trust concept is like this, it is a kind of investment by means of pooling funds from many individual and corporate, to be invested into various investment opportunities, in other words, in the different companies. unit trusts raise the money by selling shares of the fund to the public, much like any other company can sell stock in itself to the public.

there's might be confusion between unit trust and share market investment. here i highlight the different and similarities between those two.

Investment Portfolio
1. unit trust invests in various companies.
2. share invests in one exclusive company.

Investment Risk
1. unit trust risks are medium and diversified. example, if company A goes bankrupt, the other companies can back up the NAV price.
2. share market risks are very high and exclusive. if something happen to the company (rugi, tutup, bankrupt) you'll dragged into the same dilemma.

Investment Style
1. unit trust is for long-term investment since the NAV is stable upon time (depend on what type of fund you're invested in).
2. share market gives high return in relatively short period of time.

Investment Strategy
1. unit trust investor has to know the type of fund and the fund's portfolio prior to investing. he can invest at anytime.
2. share market investor needs sufficient information, experience and know the right time to invest.

Investment Trend
1. unit trust's price fluctuation is not slightly significant. e.g. if the price decrease dramatically, it won't raise as dramatic as it went down. remember, the trend is slow but stable.
2. share's price is very significant in price fluctuating. it may has a stable price for months but in a day, it can goes up to 150% or goes down to 70%.

for a layman like us, investing in unit trust is a smart way to doubles or triples our money provided we have enough infos about investing in unit trust especially in choosing the right unit trust management company. we have lots of unit trust companies in Malaysia and there goes the choice to make the right decision so that our monies will be save and actively compounded.

Choosing the Best Unit Trust - 2

unit trust performance doesn't like share market even if they're correlates. when considering share market, ones has to look art the history, performance, record, etc. of the particular company. when considering unit trust, it is important to get to know the unit trust company and the funds' performance instead of considering the companies they invested in.

unit trust's performance is slightly different than stock market. stock market graph is very obvious ups-and-downs because the objective is to get income in short term (unless the company is very2 stable so you can hold it longer). for unit trust, the graph's trend of ups-and-down is not obvious, but for long term it should go up and up. see the graph below:
the upper graph is stock market's trend (in general) where the below one is unit trust trend (in general). see the trend? for a short-term investment, buying at a really low price and sell at a really high price will be significantly relevant in a very short time. for a long-term, buying at lower price it relevant as well but ones has to consider the company's ability to retain the higher price in short time. remember unit trust is slightly different than stock market. it's not as aggressive as stock market as it is a diversified investment policy.

another thing to keep in mind is that, unit trust is not totally depend on where does it invests in but who manage the investment. even if you invest in a very good company but if you're not a good investor, you'll end up in deep debt. except you're lucky. so goes with an investor who invests in a-not-so-good company, if he is good and smart enough, he would be able to gain big money.

this starting new year a good time to look for the best unit trust company. the edge-lipper and standard's & poor rating is in the store to be checked.

happy investing!

Choosing the Best Unit Trust

simple rule : go for the company, then look for the product.

easy, when you want to buy a simple thing like shampoo, which much attract you, buying from a shopping mall or a small kedai runcit, for the same brand of shampoo? i bet you'll go to supermarket or even watson for a tube of toothpaste.

why you would go to those places rather than kedai runcit? attraction. in financial, you might not see the physical attraction as what exhibits by a supermarket. the attraction shown by the company performance and the fund managers. how to see all this?

check for the tips in the next entries.