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How to find the best unit trust

by , 05 May 2016

Unit trusts are solid investments. They deliver safe, long-term gains and take the worry of investing your money off your shoulders.

But what makes a good unit trust?

Let's take a closer look at what you should be looking for when deciding on a unit trust investment.

It all starts with what you want...
 
Before you invest in anything, you need to know what you expect to achieve from your investments. How much risk are you willing to handle? The more you risk, the more you stand to lose and make.
 
Joshua Benton, the guru stock picker behind the highly successful Unconventional Millionaire’s Stock of the Month publications says, “A low risk unit trust could perform well but could still produce lower returns when you compare it to a high risk unit trust.  Choosing the unit trust that’s right for you depends on the risk you're willing to take on and what you expect to receive.”
 
If you’re still young, you could take on a little more risk because you still have time to recover from losses. But if you’re closer to retirement, it would be a good idea to be more conservative in your unit trust choice.
 
How to find the best unit trust to invest in
 
Remember, unit trusts are long-term investments. So, they always take a long term view. If you want to get a feel for the performance of the unit trust, you need to look at its performance over a five to ten year period. That will give you a better understanding of how it’s doing.
 
Joshua says, “I like to look at the performance over the last five years and ten years.  The ten year view is important because it shows the managers’ ability to produce profits through booms and busts in the economy.”
 
What out for those fees...
 
Even if you choose a unit trust that delivers high returns, you could lose quite a bit of your returns to the fees. Make sure that you invest in a unit trust that doesn’t charge more than 3% in fees. 



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