FOR MANY first-time investors, the prospect of investing may be quite daunting as the initial minimum investment balance is often considerably high for an average person. This should not be a deterrent, as pooled investment schemes like unit trust products, are designed to accommodate all investors, including the small ones.
WHAT IS A UNIT?
A unit trust is a registered investment scheme allowing investors the opportunity to put their money into a common fund. Pooled monies are then invested into securities, some of which may not be normally available to individuals. In other words, your individual investment becomes a part of a large pool of capital, permitting wider investment opportunities.
Professional fund managers manage the funds of a unit trust scheme, so that the onus of making investment decisions does not lie with the individual investor.
The prospectus of a unit trust product usually details the
securities in which the unit trust product is invested. These securities may be equities (stocks) or fixed income-based instruments, while some unit trust products are also backed by real estate. Diversification is used by fund managers to hedge against exposure to a number of risks.
An investor may find investing in an equity-based unit trust fund very attractive, whereby investments are made in publicly listed companies. Although more risky, the returns over the medium to long-term period are usually greater. The risk is reduced as skilled fund managers are constantly monitoring the unit trust scheme's investments on the stock market.
TAX-FREE INVESTMENT
Investors may also want to
take advantage of the provisions of the Income Tax Act, making the investment tax-free. Please note, however, that conditions apply.
Unit trust schemes generally aim at maximising yields while at the same time preserving capital.
A good strategy when investing in a unit trust product is to invest a fixed amount of money at regular intervals and over an extended period of time. You should start by deciding how much money you can invest at regular intervals. Keep the amount consistent in order to make the plan effective. One way of ensuring that you save on a regular and consistent basis may be to arrange salary deductions so that your money may be directly invested in your unit trust account.
To further discuss investing and the many options we have available, contact DB&G at info@mydbg.com or toll free at 1-888-CALL DBG.
Disclaimer: All information contained in this article has been obtained from sources that DB&G believes to be accurate and reliable. All opinions and estimates constitute the author's judgment as of the date of the article. No warranty as to the accuracy, timeliness or completeness of this article and as to the opinions based thereon is given or made by DB&G. DB&G and/or its employees or directors and/or any associated person may have an interest in, or
interest in the acquisition or disposal of, the securities or class of securities mentioned herein. Call 1-888- CALL DBG if in doubt about the content of this article. Decisions based on information contained in this article are your sole responsibility.
