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Financial Planning for Families and Individuals from Alexander Babich

Get independent and objective advice from our financial planners. Personalised, client focussed
and backed by experienced professionals.

Contact Us and start your financial plan today

Why Unit Trusts

Unit trusts have long been considered low relative risk, low-return investments. If you don't have the time or the money required to invest on the stock market it's a good idea to have a look at unit trusts - a simple and effective way of saving money over time:Don't put all your eggs in one basket

  • You don't need to have an in-depth knowledge of the market.
  • It's the perfect way of building a balanced investment portfolio.
  • It's much better than saving your money in a bank account where you'll only earn a small interest amount.

How Do Unit Trusts Work?

Unit trusts allow a large group of people to pool their money into the JSE or money markets. Because your investments are spread out the overall risk involved in trading on the JSE is reduced.

Each unit trust is managed by a fund manager and requires a certain minimum amount from you each month. This amount can be as little as R100. Beginners are usually advised to invest in growth or value funds as these usually have very decent returns over time.

5 Reasons to Invest in Unit Trusts

  1. Professional Investment Management - The fund managers who take care of your unit trust funds have access to information and statistics from leading economists and analysts. They are in a much better position to identify opportunities for your investment to grow.
  2. Diversification - Unit trusts allow you to broaden your portfolio. With your nest-egg spread across a basket of securities, your overall investment risks are reduced.
  3. Ease of Transactions - Unit trusts are simpler, more convenient and less time-consuming than other investments. All the paperwork that comes with managing your own portfolio of shares and bonds is handled by the fund manager.
  4. Security - Your interests are protected by the appointment of an independent trustee who ensures that the fund manager manages the fund in accordance to the Deed of the fund and the Guidelines issued by the Securities Commission.
  5. Affordable and Flexible - The minimum initial investment amount is low as compared to investment in shares and/ or bonds. Additional investment can be made in even smaller amounts than the minimum investment amount.

Grown your InvestmentHow Long Should You Invest For?

Unit trusts are not a short term investment. You need to to keep your unit trusts for a period of between 3 to 5 years to see a satisfactory return. Because you aren't investing huge sums of money, you should give your investment time to mature and overcome the fluctuations of the stock market. Your wealth will grow slowly but you'll benefit from the long term growth of the market.

Where do You Start?

You can either go through a financial advisor who invests on your behalf or you can buy/sell unit trusts online. If you are just starting out, it will be easier to go through a financial advisor who knows how unit trusts have performed historically and can give you professional advice on where to put your money. You don't need a large sum of money to start off with, and after 5 years you will have accumulated a nice sum of money that you can always re-invest.

Start today and contact Alex Babich - the sooner you start investing the brighter your financial future will look!

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