Spreading The Risks For Small Investors (Part 2)

Pardon me for not updating the blog regularly... time is just jealous of me. However... as a continuation from the previous article...

Q: How much does it cost to invest in Unit Trust?
A: Most people associate Unit Trust with banks and that they do no pay any charges. This is certainly not true. You buy units at the quoted offer (seller) price and when you sell the units back to the managers, you would find that the bid (buyer) price would be used to buy them back from you. The difference in the prices is normally 5% though the managers are allowed to charge up to 10%.

This represent the initial service fee and other expanses. Out of this, the company pays its overhead expenses and the commissions to its agents or intermediaries.

Q: What type of investments can a Unit Trust holds?
A: Unit Trust in Malaysia can only invest in shares quoted in the Bursa Malaysia (and other Bursa as approved by the SC), Governement bonds and securities, NCDs, FDs, finance and discount houses.

Q: Are Unit Trusts similar to one another?
A: No. Normally the name of the fund may ring a bell as to the objectives of the fund. It is generally classified into income, balance, growth and specialized funds. For the new investors, most of them would opt for income or growth fund. The more experienced once may go for specialized fund.

Q: How much do I need to invest in a Unit Trust?
A: Minimum of RM500 @ RM1000 to open an account and subsequent investments can be as low as RM50. This low amount is good for those who wish to save through a regular savings plan.

Q: What documents do I receive as a Unitholder?
A: The unitholder will receive a unit certificate within 2 months as stipulated in the trust deed. Each year, the fund is required to distribute performance report twice.

to be continue...