Is Unit Trust Investment Right For You? (Part 4)

Some unit trust funds do declare dividends and unit splits to its unitholders. Please bear in mind that actual dividends received under the unit trust funds have been reflected in daily NAV and unit splits is just increase number of units holding by unitholders. Both actions, therefore, do not increase fund value as the price will be adjusted down by the same percentage declared. Worse still, if dividend is declared, it will incur personal income tax which will reduce unitholders’ return. In short, unless fund manager realize that the excess fund has limited investment opportunity, declaration of dividend for unit trust funds do not do any good for unitholders.

As only you yourself know what you really want and do not expect other people fully understand what you are thinking about. As unit trust investment is an operation on delegating your investment right to third party, namely fund manager, under trust, do not expect fund manager will act according what you intend to act. It is because they have deed of trust to follow.

For example, in the prospectus, it highlights the minimum exposure of the fund is 50% in equity. In case of equity market downturn, the manager can only reduce its equity exposure to the minimum 50% but not less than that. You therefore must seek for alternative way like sell your units or switch to conservative fund like bond fund.
Also, from the periodical investment performance report, you may realize that some of the counters hold by the fund manager may not be the counters you favor to but you just can’t control it.

Therefore, I strongly suggest you to carry out share investment by yourself as you will be in total control. Unit trust investment can be considered as a learning process in share investment or when you have limited capital. Once you gain enough experience on share investment or have enough money, by all mean, change your path to direct share investment.

Happy investing.

Is Unit Trust Investment Right For You? (Part 3)

Dollar-cost-averaging is an effective way to reduce your holding cost by having fixed amount of invested at constant interval without consideration of price. This practice can be more effective in unit trust investment. In other words, with, say, monthly fix amount, you will buy more units when current month’s price lower and buy less unit when next month price higher. In average, your average holding cost will be lower than current market which means, for long term, your return can be ensured. The beauty of this method is that you do not need to care about what the current price is. What you need to do just buy on fix amount with constant interval. That is it.

Is Unit Trust Investment Right For You? (Part 2)

Since fund manager will invest the pool of fund on behalf of fund holders, even though initial investment requirement may not as high as direct share or bond investment, cost like initial service charge and annual management fee do affect investment returns. On average, the initial cost for local equity unit trust is ranging from 5%-7% and annual management fee is normally at 1.5% per annum.

Is Unit Trust Investment Right For You? (Part 1)

Unit Trust is a trust that the fund manager will invest funds from unit holder on behalf. The trust is build up based on deed of trust. It will start with a collection of a pool of fund from unit holders who are having the same investment objective. The fund will be under the name of trustee and managed by professional fund manager.

Insurance: Whole-Life Policy or Investment-Linked Policy (Part 2)保险: 终身保单或投资连接保单(第二部分)

In this posting, I would like to compare the coverage and premium charge of these 2 policies as below:

Book Review: 20/20 Money by Hanson

This is a book that I think every investor should read through first before any investment. It provides inside views of various market pitfalls that lead to poor decision making.

He highlights that human memories are wired for the short term and is very easily affected by emotion and some other external factors. Therefore, he suggests us do not trust our memory but only believe what you actually see with support of facts. As markets are full of “noise”, you will be very easily misled and make wrong decision.

Insurance: Whole-Life Policy or Investment-Linked Policy (Part 1)

I believe many people are confusing in the sense that they have no idea on how to choose among different insurance policies.  Should it be terms policy, whole-life policy or investment-linked policy?

In my previous posting, I explained that term is suggested based on its feature of affordable premium with great protection.  Right now, for the first part of this title, I would like to share with you about the differences between whole-life and investment-linked policy.

Insurance: Protection or Investment?

Insurance should be treated as a protection rather than an investment tool. Insurance provides instant cash to the dependants of the insured, to help minimize the impact of unforeseen circumstances. Therefore, insurance is very important in terms of protection as long as it is not overused.

Book Fair

My wife and I visited Popular Mega Bookfair Expo in JB yesterday. May be it is school holiday, the center was quite crowded even though it was just a normal working day.

To exercise the spirit of continual learning, we bought quite a number of books that have cost us a few hundred dollars. By the end of the day, we felt very happy about what we got although we were all very tired.