Understanding Unit Trust Investment (Explanation in Layman Term)

I have RM100,000 and I would like to invest in property, share, bond, commodity, fixed deposit. I also like my money to be invested all over the world. I start to look for friends who have the same interest as I’m. I found 9 friends who also have RM100,000 per person and we decided to go to the lawyer to write down an agreement on how the money should be invested. Then we employed the investment expert to help us to invest according to the agreement as lay down by us. This expert is responsible to generate return 8% to 12% per annum but they are given a period of least 3 to 5 year to do so.


Advantages:

1) Instead of having 5 shares, 1 house, I fixed deposit in Malaysia only, now by putting it in Unit Trust, I become the shareholder of 50 shares, 20 houses, 10 shoplots, 10 condominiums, 10 bonds, 10 fixed deposit accounts all over the world

2) I’m allow to withdraw my money any time at market price

3) I can utilize the service of the expert

4) It saves my time in term of buying and selling of investment, market study, monitoring etc

5) It is very affordable. I can invest RM10,000 if I do not have RM100,000

6) It is very flexible. I may invest RM500 this month, not investing next month and invest RM1000 in subsequent month

Disadvantages:

1) Because it is so flexible, I may be attracted to buy something and unable to invest for a particular month

2) I need to pay the investment expert and the lawyer

3) I cannot enjoy the fun of choosing my own investment properties and shares






Note of Disclaimer:
The above illustration is just an example the help readers to understanding unit trust investment. It should not be construed as and shall not form part of an offer or solicitation to buy or sell any unit trusts. Before you decided to buy unit trust, please consult the financial advisor to determine if your risk profile matches the investment fund strategy.