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Are You Ready to Invest in Unit Trusts?

Are You Ready to Invest in Unit Trusts?

by programmerJuly 2, 2016

Have you decided to become more aggressive with your investments beyond fix deposits? A smart investor would tell you to not put all your eggs in one basket, so diversifying is definitely a good move.How you move, though, will determine whether your diversification will bring you profits or losses. If you’re thinking about trying your hand at unit trust investments, here’s what you need to consider first:

Your Appetite for Risk

How brave are you with your money? Your willingness to bet your money on (hopefully) informed choices will be a big determining factor when you evaluate your readiness to take the leap. Fixed deposits are a safe form of investment, but their low returns on investment (ROI) via interest rates does little more than hedge against inflation. Unit trusts are a step up from fixed deposits in that it can potentially give you returns of over 10% compared to the 3.10% of fixed deposits. If you want to grow your funds, you’ll need to go for something higher risk to gain higher profits. Can you take the leap? Or can you yet afford to potentially lose some of your investment capital?

Your Time Horizon

How long will your funds be available to you for investment? Are you a 20-year-old looking to further your studies within the next five years with the funds you have? Or are you a 30-year-old looking to expand your portfolio and build your nest egg over the next two decades? Unit trust funds appreciate and depreciate over time, but they’re not as volatile as the stock market. This means that your ROI margin may not be substantial in the short term. Unit trusts are therefore more suitable for mid- and long-term investments. If you’re looking to cash in on your investments in the near future for your further studies, unit trusts may have to wait a while longer.

Your Available Funds

How big is your investment fund right now? As with any other form of investment, the more funds you invest, the greater your returns in terms of ringgit and sen, so you should consider how much you’re willing to set aside for investment purposes first before diving in. Remember, if you’re going for something mid- to long-term like unit trusts, your money won’t be immediately available to you for day-to-day or emergency uses. Some unit trusts also impose a minimum investment value so you may not be able to break into this market yet if you’re not ready. If you want to prepare yourself to invest in unit trust, perhaps you should first set aside a portion of your income every month for your upcoming investment.

Your Dedication to Research and Analysis

Unit trusts require a certain amount of research and analysis in order for you to fully take advantage of this form of investment. The basis of investment is to buy when prices are low and sell when prices are high. You’ll only notice these fluctuations if you’re constantly looking out for them. Once you’ve opened a unit trust account, you’ll be able to access and monitor its performance online. You can buy and sell your units then. You’ll also be able to monitor the performance of various unit trusts via The Star, also availableonline.


Did you answer positively to all the criteria above? If yes, congratulations – you may well be ready to take your first step towards investment portfolio diversification!

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