Man reads up on investing from his iPad

A beginner’s guide to unit trusts

You’ve heard the term bandied around: it is supposed to be diversified, its risk is spread. But what exactly is a unit trust?

Essentially, unit trusts are professionally managed investment funds which pool the financial resources of individual/corporate investors with similar investment objectives. These pooled resources will be invested in a selected investment portfolio which comprises stocks, bonds and/or other assets. They are diversified across geographical markets, industries and asset types to reduce risks.

Here are four reasons why unit trusts can be an attractive investment.

1. Spread the risk in investing
Unit trusts provide small savers with an excellent opportunity to invest their savings in a diversified portfolio of stocks or bonds – much cheaper than if you were to buy the assets individually. This comes from pooling your money together with other investors so the fund manager can purchase a suite of assets, including blue-chip stocks. In DBS, you can start investing in unit trusts from as little as S$100 a month.

2. Pick one that suits you
While a fund will hold a range of assets e.g. a portfolio of stocks, bonds, or a combination of both, they tend to have a certain focus. Some may look at global or Asia stocks; others at emerging markets, fixed income assets, commodities, or even Forex. Find one that suits your preferences. If you need ideas on where to start, take a look at our shortlist of positively rated funds that are aligned with the bank’s current investment views.

Risk vs. returns - the difference between fixed income funds, balanced funds and equity funds

3. Leave the work to the professionals
Unlike buying stocks – where you study the market to make informed choices – unit trusts are managed by full-time fund managers who do the research, selection and adjustments for you. This professional uses his access to investment information and research to make investment decisions for you.

4. Invest according to your budget and timeline
There is no lock-in period. With unit trusts, you can cash out anytime. You can invest using any time frame you are comfortable with. But it is typically recommended that you invest over a substantial time period to reap the benefits of investing.

Get started now

A man monitors the stock market on his smartphone

Here are two ways you can get started:

  • Lump sum
    Maybe you’ve just gotten your bonus or an inheritance, or you want to do something with your savings. Use a chunk of it to invest in unit trusts.
  • Regular monthly contributions
    Just as you set aside a sum of money for savings each month, you can make regular contributions into unit trusts. Putting money into a fund each month also lets you benefit from Dollar Cost Averaging, wherein you buy more units when prices are low and fewer when prices are high.

Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.

All investments come with risks and you can lose money on your investment. Invest only if you understand and can monitor your investment. Diversify your investments and avoid investing a large portion of your money in a single product issuer.

Disclaimer for Investment and Life Insurance Products

Ready to start?

Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances.

Let's Meet

Alternatively, check out NAV Planner to analyse your real-time financial health. The best part is, it’s fuss-free – we automatically work out your money flows and provide money tips.

Log in Now

Get started with unit trusts

Thank you. Your feedback will help us serve you better.

Was this information useful?

That's great to hear. Anything you'd like to add?
We're sorry to hear that. How can we do better?
Enter only letters, numbers or @!$-(),.