Guiding consumers since 2009

Unit Trust

You can invest your savings in a unit trust where it will grow faster over time than it will by simply staying in a normal bank account. This is different from investing directly in the stock market since you will entrust your money to a fund manager.

They will then place it in a fund consisting of a carefully selected basket of shares, bonds, and other asset classes. Rather than managing this yourself, you will have a professional who understands the market and can make the best investment decisions on your behalf.

By filling in the below form, you’ll have the opportunity to find out how a fund manager can make your money grow over time.

How do unit trusts work?

They are called “unit” trusts because fund managers pool their clients’ money, invest it in a combination of investment avenues, and then divide the overall investment into equal “units”. These are then allocated to their clients, who can make use of the compound interest of a larger investment.

Unit trusts are particularly good investments because they offer a diverse investment portfolio in one place, which is managed by an industry professional. Without having in-depth knowledge of investments, you’re able to capitalise on this diverse portfolio and leverage the weight of many more investors’ money.

For the most part, you’re able to access your investment within 48 hours. Each unit trust is different and it’s best to check the terms and conditions of your unique contract, but it’s mostly accessible within a reasonably short period.

These kinds of investments are also well-regulated, which means that you don’t have to be concerned about whether your fund managers will take advantage of your investment. In other words, you’re unlikely to get caught up in any kind of investment fraud. In the same vein, you can rely on transparency within the industry, since legislation requires fund managers to disclose all costs and the general details of the fund.

How long should you invest your money?

If you’re interested in a short-term investment, which is between three and 12 months, you would explain this to your fund manager, and they would invest your money in lower-risk options. On the other hand, if you intend to invest your money for a longer period, such as three to five years, your fund manager may consider a higher-risk portfolio. 

Ultimately, you’d earn the most interest and see the largest amount of growth if you invest your money for a longer period. This is mostly because of the impact of compound interest. The longer your money is allowed to grow, the larger the sum on which interest is allowed to accumulate, and the more exponentially your money will grow. However, that said, a short-term investment in a unit trust will still yield better results than a simple bank account.

Which fees can you expect to pay?

There are two main fees that you can expect to pay when taking out a unit trust. These include the following:

  • Entry fee: This is sometimes called the “initiation fee” or “transaction fee”, and it’s required when you join a unit trust.
  • Annual fee: Different from the entry fee, this fee is due annually. Also known as the “managers fee” or the “service fee”, this will consist of a percentage of your overall investment.

The best thing you could do when considering the fees of a unit trust is to convince your fund manager to outline the exact fees you’ll have to pay. This should give you a clear indication of the costs involved, which you should check gainst the fine print of your contract.

Unit trusts are good investments because they can be made use of by anyone and still offer decent gains – even in the short-term. Before joining a unit trust, always make sure you do your homework and shop around until you find the best deal for your unique needs.

By filling in the above form, you’ll have an opportunity to speak to a fund manager and get a deeper understanding of what it would mean to join a unit trust. If you’re ready to take the leap, or even if you’re just curious and you’d like to know more, fill in the above form.


Guides

The guide below helps to explain unit trusts. If you still have questions after reading the guide, ask our unit trust expert or you can also visit our FAQ page.

Related Articles

Featured Are unit trusts a good investment?

Without a background in finance, it may be difficult to decide where to invest your savings. Joining a unit trust is one way of entrusting your money to a specialist who will ensure you receive the best returns for your buck. We had a look at how unit trusts work, whether passive investments perform as well as active investments, and whether historical performance is worth taking note of. 

Read more

The cost of switching to a new unit trust

There are many benefits to investing in a unit trust, but this does not mean profits will continue to stream in. Just like other investments, unit trusts come with risks and sometimes it is best to reassess its value. 

Read more

Selection crucial for unit trust investments

Unit trust products are still the preferred method of investing for many local investors.

Read more

Liberty launches affordable unit trust platform

Liberty has launched a low-cost investment platform that will enable consumers to invest with a multiple of unit trust providers.

Read more