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Investing in unit trusts is easier than you may think

by , 31 January 2014

If you're looking to invest on the stock market, but you don't want the hassle or don't feel you have the experience to pick shares, then unit trusts could be perfect for you. By buying into unit trusts you get exposure to the market and a professional does all the stock picking for you. But how do you go about investing in them? Read on to find out…

Buying unit trusts is very easy, the research team at The South African Investor explain…

The companies offering unit trusts give you two ways to do it:
  1. You can buy unit trusts by way of a lump sum or fixed ‘once off’ payment; or
  2. You can purchase unit trusts in equal monthly instalments by way of a debit order through your bank account.
As with all financial accounts, you will have to provide the necessary FICA documents. This includes your ID or passport and proof of your address.

But opening an account to buy unit trusts with is the easy part.

Now you have to decide which unit trust to invest in

The next thing you need to do is decide what unit trust you’re going to invest in. There are literally hundreds of different unit trusts available for you to invest in.

To look at it very broadly, there are three different types of unit trusts available:
  1. South African unit trusts: These unit trusts must invest a minimum of 85% of their assets in the South African investment market at all times.
  2. Worldwide unit trusts: These unit trusts invest both in the domestic market and in foreign markets. A minimum of 15% of their assets must be in the South African market and a minimum of 30% of their assets must be in the foreign market.
  3. Foreign unit trusts: These unit trusts must invest a minimum of 85% of their assets outside South Africa at all times.
You can buy unit trusts from different financial services companies like Old Mutual and Investec, or from your bank.

To help you weigh up your options, all unit trusts have a fact sheet provided for them. This includes:
  • The fees and charges;
  • The minimum investment amount;
  • What the fund invests in; and
  • The performance of the fund.
So there you have it, how investing in unit trusts is easier than you think.



Investing in unit trusts is easier than you may think
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