Unit trusts – the buffets of investments
Buffets are popular in Singapore, a nation of many foodies. Do you also fancy a delightful spread, even for investments? If so, you may wish to consider investing in unit trusts (UTs). Here are five reasons why UTs are like buffets.
1. They come with a good spread
When it comes to investing, diversification is always a good way to balance risk and reward in your portfolio. Unit trusts are exactly that, offering a varied selection of investments so you don’t need to pick them individually.
2. You can choose one to suit your taste (risk appetite)
Unit trusts let you invest across a wide range of markets, industries and sectors. They also come with varying risks and rewards so you can always find something to suit your appetite:
Fixed Income Funds: Funds that invest in bonds and pay out a fixed amount on a fixed schedule
Equity Funds: Mutual funds that invest primarily in stocks
Balanced Funds: A mix of bonds, equities and commodities
3. It’s put together by a professional
A fund manager takes care of your unit trust investments – watching the market, selecting investments and adjusting the mix continuously. With access to investment information and research, he can decide on the fund’s strategy and make sharp long-term decisions to manage the funds.
4. You get variety at affordable prices
Buffets offer a huge variety at a price significantly lower than if you had ordered all the items à la carte. Similarly, unit trusts enable you to invest in a suite of assets that can include blue-chip stocks at an affordable price, starting from as little as a one-time contribution of S$1,000 or regular monthly contributions of S$100 per month.
5. Cash out when you’ve had your fill
It’s entirely up to you. Most unit trusts are not locked in for a definite period and can be sold and converted into cash at any time. So, invest as much as you are comfortable with, using a time frame that suits you.
Getting your first bite with a two-prong approach
- Give yourself a head start
Jump the (buffet) queue and start investing in unit trusts with a lump sum from your bonus or savings.
- Grow it steadily
Keep the momentum you’ve got going, by adding to the pot with regular monthly contributions.
Ready to invest?
Start with a Regular Savings Plan – if you’re a DBS/POSB customer, you’re only a few clicks away from your first investment.