Mar 13 2014, 07:56 AM
QUOTE(brien1193 @ Mar 13 2014, 12:05 AM)
1. Diversification usually means getting an average return for less risk, as shares moving up would cancel out losses of shares moving down. Unit trust try to achieve a higher return by adjusting the diversified portfolio for roughly the same amount of systematic risk, so a good measure is to see whether they outperform a diversified benchmark like the klse or emas index.
2. If an equity fund is chosen, usually the risk of the fund is the same as the market, meaning roughly equal systematic risk. The idea is think whether the fund can get you higher returns for the same risk.
3. Liquidity is one of the main attractions of unit trust. No need to pay penalties for withdrawal like fixed deposits, or worry about whether your sell orders on the stock exchange will actually be taken up.
4. Comparing the service charges for any higher risk investment (gold, property, stocks, etc) for an average investment of rm1000 per transaction, most have transaction charges of between 3-6%, so unit trusts are about equal on affordability to other investment.
5. Unit trust is an alternative to savings. It exposes funds to higher risk in order to get a higher return.
The above is assuming equity based funds.
An appropriate strategy would be to follow some golden rules;
1. If you have no idea what you're doing, do ringgit cost averaging
2. Do not invest so much that it cramps your lifestyle or you can't sleep at night
3. Aim for long term, over a period of more than 5 years, unit trusts are the best performing asset class.
If you have further questions I'd be happy to reply.
er.. generally i agree with your thoughts, though.. on items like:2. If an equity fund is chosen, usually the risk of the fund is the same as the market, meaning roughly equal systematic risk. The idea is think whether the fund can get you higher returns for the same risk.
3. Liquidity is one of the main attractions of unit trust. No need to pay penalties for withdrawal like fixed deposits, or worry about whether your sell orders on the stock exchange will actually be taken up.
4. Comparing the service charges for any higher risk investment (gold, property, stocks, etc) for an average investment of rm1000 per transaction, most have transaction charges of between 3-6%, so unit trusts are about equal on affordability to other investment.
5. Unit trust is an alternative to savings. It exposes funds to higher risk in order to get a higher return.
The above is assuming equity based funds.
An appropriate strategy would be to follow some golden rules;
1. If you have no idea what you're doing, do ringgit cost averaging
2. Do not invest so much that it cramps your lifestyle or you can't sleep at night
3. Aim for long term, over a period of more than 5 years, unit trusts are the best performing asset class.
If you have further questions I'd be happy to reply.
3. Liquidity is one of the main attractions of unit trust. No need to pay penalties for withdrawal like fixed deposits, or worry about whether your sell orders on the stock exchange will actually be taken up.
How can U compare to FD ar?
As compared with ETFs and stocks ok lar - however, good ETFs and stocks are also highly liquid & can be easily sold (low bid/ask spread) due to their daily volume.
4. Comparing the service charges for any higher risk investment (gold, property, stocks, etc) for an average investment of rm1000 per transaction, most have transaction charges of between 3-6%, so unit trusts are about equal on affordability to other investment.
U sure on this?
For RM1K transaction, it cost me approximately 1.2% for stocks. In fact, can get even lower if "cash transaction", just like mutual funds where U put in cash first. My 1.2% is via t+3 days to settle the payment.
VS
mutual funds' / unit trusts' 2% to 6% entry cost no matter how much?
BTW, as investors, as we grow our means, does that mean we should still keep doing mutual funds / unit trusts and pay the exorbitant entry costs if we can move $1K, $3K, etc per quarter or month?
1. If you have no idea what you're doing, do ringgit cost averaging
er.. if one has no idea, then DONT even touch until more is known and understood lar.
Dollar averaging into kaka is still kaka right?
3. Aim for long term, over a period of more than 5 years, unit trusts are the best performing asset class.
U sure on this? based on what statistics?
Heck, if true, would ETFs and direct stocks in good businesses be even better?
ie without the 2% to 6% service charges upfront where i lose $ right off
+losing 1.5% to 2.x% EVERY YEAR for management fees +"other costs"
VS compared to just buying-in good value into good businesses' stocks or ETFs?
Again, i'm not against mutual funds / unit trusts yar, just something glaring that i thought looks not too right.
Just thinking & bringing up discussion / clarification points
This post has been edited by wongmunkeong: Mar 13 2014, 08:06 AM
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