5 good reasons why you should invest in unit trusts:

1. You don’t need to be an expert

Unlike some other types of investments, you don’t need to be an expert or possess years of financial knowledge to reap profits. Unit trusts are collective investment schemes which pool investment money from multiple people.

These collective investment portfolios are then managed by experienced and skilled fund managers. By having experts do the hard work, unit trusts are an ideal solution for novices and busy people.

There is no need to worry about the best times to buy or sell your investments. The risks are kept to a minimum thus you can start building your wealth straight away!

2. You don’t need a big income

Most unit trust providers give you the option to either invest in lump sums or smaller, regular amounts each month through a debit order. The latter option makes it possible for those on a limited income to slowly accumulate large amounts of investments.

Furthermore, by pooling your money together with other people, you can now afford to buy assets that are ordinarily only available to wealthy investors. The cost of some shares is far too expensive for regular individuals so the collective nature of unit trusts provides a solution towards this problem.

3. Invest in a diverse portfolio

The fund managers who take care of your unit trust funds usually diversify the investment towards a variety of assets. This normally includes stocks or equity funds, bond funds, corporate bonds, money market funds, REIT funds, property funds and many more.

By spreading the money across a diverse portfolio, your overall investment risks are reduced. If one investment doesn’t work out, you won’t lose your entire savings. However, this also translates to the opposite scenario.

If one investment does incredibly well, your entire holding won’t rise in value to that extent. But this brings us back to our earlier point – unit trusts are meant for novices and busy people. Once you have the experience and expertise, you can try your hands at riskier (and possibly more lucrative) investments.

4. Safe and secure investment

Although a fund manager makes decisions on your behalf, he or she can’t access your cash. The interests of you, the unitholder, are protected by the appointment of an independent trustee to hold the fund’s assets on behalf of the unitholders.

The laws (and the guidelines by the Securities Commission Malaysia) surrounding unit trusts make it hard for others to steal your money and this helps reduce the investment risks for investors.

5. Ease of liquidity

Unlike some other investments that lock your money away for fixed periods, unit trusts have a higher level of liquidity. You can readily convert your units into cash at the following day’s unit buying price.

Furthermore, you do not have to pay penalties when you choose to do this. This is especially an advantage in cases of emergencies or when you need your money on short notice.

Compare this, if you will, to some other investments (like fixed deposits) that tie up your money for years. They will require you to pay a big amount of money if you opt to access your investment any sooner.