5 Reasons Why People Don't Buy Unit Trust

Posted by Kris | Sunday, December 16, 2007 | | 0 comments »

What is unit trust?

Unit trusts are open-ended investments; therefore the underlying value of the assets is always directly represented by the total number of units issued multiplied by the unit price less the transaction or management fee charged and any other associated costs. Each fund has a specified investment objective to determine the management aims and limitations.

Now in bull run market , alot of financial institution are rushing to roll out their products. They are cleverly packaged to suit all types of investor. Generally, unit trusts can be divided to a few type.

a) growth & dividend based -> Every yearly quarter or stipulated time frame, you will receive dividend based on the number of units that you have

b) low risk,conservative -> For those who just want to beat the inflation and the fixed deposit rates. Unit trust that invests in bond and money markets.

c) Medium risk - A good balance in equity and bonds.

d) High risk -> This is where the bang is . In a good bull market run, the returns can easily reach 20-30% from your initial capital. But take cautious, you can still lose "some" money here when the market turns sour. No pain , no gain.

Top 5 Reasons Why People Don't Buy Unit Trust.

5. Ignorance is bliss. Not many people are exposed to the benefits of investing in unit trust. They put all the money on fixed deposit. Or worst, just let the money sitting in the savings account.

4. Lazy to take the effort to know more about unit trust. Or to ask friends whether they bought unit trust or not for fear of letting people know that they are loaded. It may sound weird but it do happen. Trust me.

3. Don't believe unit trust can give a decent return. Alot of people are expecting quick and huge returns over a short period of time. People start to panic when they see the unit prices fluctuate a bit towards the downside. This is a common misconception as over a long period like 5-7yrs even in a bad market, you will still earn more than the normal fixed deposit. And you don't need to do anything, just sit there and wait for the money to grow. What more can you ask.

Uncle: All RED RED...Die Die lor...

2. Need some uncanny skill to select the correct unit trust. In the words of Warren Buffet, the greatest investor alive, you don't need to be a genius to make a sound investment. What you need is common sense. Pick a fund or the unit trust institutional that has a good track record for a long period of time. If you dont know what to pick , diversify your unit trust portfolio.

You don't need to be a genius to reap profit from your investments!! You always need to have a battle plan though.

1. No money to invest!!! This is the greatest excuses that most people give when approached. This will be the greatest mistake that a person can make in his/her life. Without investing, your money will not grow and will be eroded by inflation as the time goes by. Besides that, the present money that you have cannot grow fast enough to cope for the future challenges ahead. For example,what happen if you suddenly required a princely sum to get married. (Wedding these days can cost a BOMB)

Can you kept on telling your long time girlfriend that you cannot marry her now because you don't have the money year by year.. LOL