Unit trust is not just buy and forget

Is unit trust a better form of investment than fixed deposit? It does give better returns, right? Actually, when we ask ten different unit trust buyers, each would give us a different response. Some may not know what’s their actual returns, they only know they are buying it on a monthly basis. Some may tell you the returns are actually bad and they lost money in the first few years. Some, like me would tell you that the returns are not superb but is still way above what fixed deposits are giving. Perhaps a better question to ask would be, did you buy your unit trust from a professional (who’s been doing this for years) or just someone you happened to know? (who quit after a while…)
Unit trusts, especially the aggressive ones are always equity based; stocks. This meant that fluctuations in the stock market would also be affecting the unit trust. Buying at the wrong timing may even make the investment turn into red! However, if you bought from someone who is actively managing your accounts, then you may skip the losses instead. He may have switched your funds into something more stable when the stock market has gone way up too high. Yes, of course you would need to sign the switching forms to allow him to do that in the first place. From my first unit trust purchase over 12 years ago till end of last year, my returns per annum is around 7 percent. Perhaps not that awesome to some but I think it is still a very good form of diversification. Never put all eggs into the same basket, remember?
Oh yeah, should we withdraw EPF and put into unit trust instead? That same question applies, are you withdrawing it to allow a professional to help you? Or are you withdrawing because your friend told you he has done the same? My personal choice would be to buy unit trusts. I would let EPF continue to manage my funds instead. Else, we may have just one stream. EPF returns are really not that bad lah. By the way, unit trust should be a continuous journey yeah. Perhaps 20 years? Until we retire? Keep putting aside money for them, get a good agent and after perhaps 10 years you may see that pile starting to grow visible. Remember, earning 7 percent from RM5,000 is really nothing much but even if we have just RM100,000 earning just 5 percent per annum, that’s already RM5,000 per year, compounded continuously.
One tiny little tip? Learn about all those actual companies that your unit trust is buying. Understand why they bought these companies. You can then also start your own stream of stock investment too. Remember, low risks means low returns and high risks meant potentially higher returns. The thing we need to do is to manage the risks accordingly. Happy thinking long term.
written on 3 Jan 2017
Next suggested article:  Good notes for stock investing from an investment guru


  1. Dear Charles
    Unit trust is a fund created and managed by a company or fund. It is a tool or instrument of bundles of mostly shares. When anyone sells a unit trust, he/she is usually only a sales rep of the fund. The sales rep joins a fund to sell that trust after he/she gets some training. This bundle( unit trust)is usually selected by a professional fund of mostly shares to ensure divestity or risk spread. So when the fund does well or not, sales rep cannot be blamed. Just like you buy a product, and when the product does not perform to your expectation, sales people can only be blamed for misrepresentation but not the product itself.

    1. Hi Fred, nope, not blaming the sales people. However, my agent helps me to switch between funds as and when necessary. This is very different from an agent who asked you to buy and then no longer help you to monitor and recommend changes for example. That’s why I have good returns thus far even if not spectacular.

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