Investing In Unit Trusts

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Unit trusts are probably one of the most common forms of investments in Malaysia. Unit trusts, sometimes known as mutual funds are offered by most major banks in the country and they provide you with a sound option if you are looking for a market which is more stable as compared to the others.

How does it work?

The main idea behind unit trusts is to have a collective amount of money and then invest them in markets that are most likely to have good returns. This is the very reason why unit trusts are managed by banks and financial institutions. Besides that, investment firms also manage unit trusts as they are very focused on these markets.

Let the experts do it

The best thing about unit trusts is that you are letting the financial experts do the job when it comes to managing your investments. This means that you do not need to sweat over which stock to buy or when to buy. This is totally different from investing in the stock exchange. However, the stock exchange is not the only market that unit trust managers invest in because they could be using a more balanced portfolio that covers other money markets like gold and bonds.

Why should you invest in unit trusts?

Among all the many types of investment types, unit trusts is one sound market that you can consider for a few obvious reasons. The most prominent one would be that because you do not need to put or allocate a large amount of money. And it gets better. You do not need to be an expert in investments in order to venture into this market.
Typically, most banks in Malaysia have unit trust products for you to invest in. Some even let you invest from as low as RM100 per month and then you can watch your money grow. When you do not have to worry about which market your money goes into, it changes your mindset altogether. What more when you have financial experts who have many years of experience in money investments to handle your money for you.
One other significant factor that might drive you to invest in a unit trust is in its liquidity. You are not limited to any form of regulations or periods. When you feel the need, you can buy or sell more units (as long as you can afford it). When you have such flexibility, it makes investing your money so much easier as you get more freedom to move your funds from one place to another when there is a need.

Tips on investing in Unit Trust

One thing for sure, unit trusts in Malaysia is considered as one of the safest investment markets. Regulated by Malaysia’s Securities Commission, you can check the list of unit trusts offered in the country through FIMM or Federation of Investors Management Malaysia.

  • Tip 1: While most banks like Public Bank, CIMB and Maybank offer unit trust products, you can also buy these from private firms such as Finnwealth Management and Kedah Islamic Management Berhad. You MUST, however, check the legitimacy of these firms before you invest
  • Tip 2: Decide on how much you can afford. You can either put in a large sum of money and then leave it to grow, or you can decide to invest little by little (like RM150 per month).
  • Tip 3: Paying for your investment can be done through EPF. Certain unit trusts are approved under the Members’ Investment Scheme of EPF which means you can withdraw some part of your contribution to invest in unit trusts
  • Tip 4: When choosing the fund that you want to invest in, there are a few factors that you must consider. Your agent will most likely be able to tell you which one is best (or sound) but you should also look at factors such as the rate of returns. This will give you an indication of how much you can expect to profit from the amount you are investing in.
  • Tip 5: Look at the recognition of a certain fund. This gives you an indication of whether the fund is credible. It makes a huge difference since you will be putting your money into a certain fund. For instance, certain fund managers have been given market recognition for their management of unit trusts which mean you can actually make strong considerations before starting out
  • Tip 6: Not all unit trusts are the same. You must carry out your own research before you invest in whichever unit trust you choose. Every unit trust comes with its own risks and minimum investments. It is best for a new investor to look for those with lower risks before moving to the higher ones. Take note that lower-risk funds usually have lower dividends but you would start small where your profit will be lower as well.

What is the unit trust investor like?

Generally, the profile of a unit trust investor is quite different from those who put their money in money markets like cryptocurrencies and stocks. They typically are those who:

  • They are those who do not appreciate too much risk when it comes to investing their money.
  • They look for stability and long-term investments. In fact, they are looking for something that is safe so that their principal amount is preserved
  • Do not mind having someone else handle their money as long as they do not have to leave their money into high-risk situations
  • Does not necessarily know where their money goes to. It is not mandatory for them to know.
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