Why trust unit trusts


Once bitten twice shy. Some people I talk to still feel the pain of their losses during the internet bubble in year 2000. But who would not. I lost 80% of my money too!

On hind sight, I should have never put all the money in one basket. Thankfully, that lesson taught me to be more prudent and I was prepared to invest again after that.

So, why invest in unit trusts?

1. They are well diversified
Unit trusts spread the risks involved in investing because they invest in a variety of financial instruments, including stocks, bonds, properties, commodities, currencies and cash.

2. They are professionally managed
Unit trusts are managed by professional fund managers. Their job is to monitor your investments and make necessary investment decisions based on research ad analysis in order to generate good returns.

3. You can invest globally
Unit trusts are invested all over the world and in various business sectors. This way, you have a lot more opportunities. Think Latin America might boom? Interested in commodity stocks? Unit trusts pick out the best companies in these sectors for you.

4. You need only a small amount of investment to start with
Initial investments usually start from $1000. You can also begin a Regular Savings Plan (RSP) where you set aside a fixed amount to invest at regular intervals. With unit trusts, a small sum buys you into a well-diversified portfolio.

5. Buying and redeeming is simple
Most unit trusts in Singapore allow daily buying and selling of units. As long as your orders are received by the day’s cut-off time, you can be assured that your purchases or redemptions will be transacted at that day’s prevailing price.

6. They are relatively safe
If you have a low tolerance for risk, you can choose a fixed income unit trust that can give you stable returns. Generally, over the medium to long term, it will likely perform better than your fixed deposits.