A unit trust – a brief explanation
A unit trust is a type of investment fund that allows you to pool your money with other investors and invest in a variety of assets, such as shares, bonds, property, or cash.
A unit trust is managed by a professional fund manager who decides what to buy and sell according to the fund’s objectives and strategy. You can buy or sell units in a unit trust at any time, depending on the market price of the units. The price of each unit is calculated by dividing the total value of the fund’s assets by the number of units issued.
The more units you own, the more you benefit from the fund’s performance. A regular monthly purchase is the best way to buy as you evenly spread the cost and smooth out and the ‘up’s and ‘downs’ over time.
Some of the advantages of investing in a unit trust
- You can access a diversified portfolio of assets with a relatively small amount of money.
- You can benefit from the expertise and research of the fund manager who makes the investment decisions for you.
- You can choose from a wide range of unit trusts that suit your risk appetite, investment goals, and preferences.
Some of the disadvantages of investing in a unit trust
- The performance of the unit trust depends on the skill and judgment of the fund manager, who may not always make the best choices.
- You have to pay fees and charges to the fund manager and other service providers, which can reduce your returns.
- You may face market risks and volatility, which can affect the value of your units.
A unit trust is a good way to invest in the markets but beware, like any investment, markets go up and they go down! Be aware and be careful.
This is not advice or recommendation.
RESEARCH! RESEARCH! RESEARCH!