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Unit Trusts, The ‘Safest’ Investments For Beginners In Malaysia?

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Are you new to investing? Well, a lot of choices out there that can be used as your investment platform. But in this article, we will look more into one of the investments offered in Malaysia which is unit trusts.

Do you know what unit trust is? Maybe we heard it before but do we know how unit trust works? Is it better than any other investment scheme or is unit trust the safest investments for beginners?

Maybe this article will help you to understand more about this product, unit trust. Be advised that investment goals vary for each one of us. It also depends on our investment goals to decide on which type of product or platform suit us well.

What Are Unit Trusts?

Unit trust investment stock chart

Unit trusts can be simply said as mutual funds that will be invested in various places. It holds assets that will turn into profits which will be given to the investors. It pools money from various investors to invest in assets such as bonds and equities. Fund managers will manage the investments for you. All you need to do is just relax and enjoy your daily life.

But hey! You should understand that investing has its own risk. Your investment may be profitable or you may face some losses.

It’s good that we know and understand a few basic things in unit trusts.

  1. Unit Trust
    Have you heard about Amanah Saham Bumiputera (ASB)? The concept is about the same. ASB is one of the funds in unit trust but it’s only for the Bumiputera. ASB will give you bonuses and dividends as your profit while you will gain profit from unit trusts via dividends and the increment of the funds’ price per unit.
  2. Unit Trust Management Company (UTMC)
    Malaysia Security Commission (SC) monitored UTMC. For UTMC to operate in Malaysia, it will need approval from the Central Bank of Malaysia and the Ministry of Finance. Based on the report by SC, there are 39 approved unit trust management companies in Malaysia as of March 2022.
  3. Fund
    Based on the same report from SC, there are 761 authorized funds and 279 of them are shariah-compliant funds.

Is It Safe To Invest In Unit Trusts?

Unit trust investment stock chart

As what being said before, any investment will have its own risks. Depending on our risk appetite, we can choose our investment that can cater to our needs in investment. Unit trusts make it easy to diversify our portfolio but different funds will have different risks and rewards. I’m sure that you’ve heard this before, but a high-risk investment will provide you with a high return. Be in mind that not only you’ll be served by a high return but there’s a chance your investment might not work well and prepare for your losses (most probably with high losses too!).

What Are The Fees Incurred In Unit Trusts Investment?

Unit trusts investment use fund managers to manage our pool of money to invest. There are fees that need to be paid even if the investment are not profitable.

  1. Management Fee
    Charged once a year
  2. Trustee Fee
    Charged once a year
  3. Switching Fee
    Charged when switched to another fund
  4. Redemption Fee
    Charged when unit sold
  5. Sales Charge
    Charged for each ‘buy’ transaction

Safest Investment For Beginners?

Unit trust investment stock chart

Have you understood what unit trust is now? At least, you get a rough idea of what and how unit trusts work.

Do you think that unit trusts are the safest investment for beginners? Well, the answers are yes and no. Each one of us has a different risk appetite. Before you make any investment decision, make sure that you’ve studied and understand on how things work.

Don’t rush and jump into something that you’re not well of. Investment is a journey. It’s not some kind of Skim Cepat Kaya.

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