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Why unit trusts could be the perfect investment vehicle for you

by , 15 April 2015

If you want to start investing for the long-term, but you don't want to pick individual stocks and you don't have a large lump sum to put to work, what can you do?

One option to consider is investing in unit trusts.

So what are unit trusts? What do unit trusts invest in? And how much do you need to invest?

Read on to find out…


What are unit trusts?


Unit trusts are collective investment schemes.

When you invest in a unit trust, your money joins that of other investors who invest in the fund. A fund manager then invests it into the stock market and other investments.


What do unit trusts invest in?


Unit trusts invest in a wide variety of different assets. These assets include shares, bonds, fixed-interest securities and overseas investments.

You can invest in a range of different unit trusts to gain diversification. For instance, invest in a funds concentrating on the Johannesburg Stock Exchange’s top 40 companies, property, commodities, bonds and top dividend paying shares.

There are hundreds of different unit trusts available.


How much do you need to invest in unit trusts?


You can invest in unit trusts from a couple of hundred rand a month, depending on the fund.

You can either opt to invest a lump sum or invest on a monthly basis. This makes is easy to gradually grow your investments.

Each unit trust has a fact sheet. This details information like:

  • What the fund invests in;
  • The risks of the fund;
  • The past performance of the fund;
  • The fees and charges of the fund; and
  • The minimum monthly and lump sum amounts.

Bottom line: If you don’t have a large amount to invest, unit trusts offer you a cost effective way of investing. Just make sure you compare the costs and fees of similar funds before making a decision.

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Why unit trusts could be the perfect investment vehicle for you
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