1) Your risk tolerance factor
What is your risk tolerance factor? It is a combination of how much money you can afford to lose, your financial goal, investment time-frame, etc etc. Remember, a higher return comes with higher risk. There are few links (such as below) that can assess your risk tolerance factor. You can try them:
http://www.kipbiz.org/tools/riskfind.html
http://www.fmncc.com/content.cfm?ContentID=128
http://www.mmhabits.com/determine-your-investment-risk-tolerance/
Usually in every unit trust portfolio, there is determination of its risk. You can get in from the Fund’s website. For example, Public Mutual’s China Ittikal Fund has been categorised as Aggressive (High Risk). Knowing that your risk tolerance is high, therefore, you can choose your fund with more confidence. If you risk tolerance factor is low, you might not consider investing in the particular fund.
Are you planning to buy a car, house, marriage or planning for retirement? How many years do you need to achieve your goal? This could have indirect impact on your investment. Take note that Unit Trust is most suitable for the medium to long-term investment. It means, for short-term investment, you can invest but can’t expect the money to double or gain a very high divident, etc.
3) The promotional period
Usually, newly launched fund have promotional period, whereby the price would be quite low compared to rest and the service charge would also be lowered. Be sure to ask your Unit Trust Consultant regarding the current and upcoming promotional period. This would also ensure that you abide by the ‘Buy when low, Sell when high’ rule.
There are fees applicable for investing in a unit trust, and these will vary depending on where you decide to invest. You need to make sure you do your homework before investing in any one particular trust, so you know what to expect. Once you have done that you can organise your investment and keep an eye on it to see how well it performs on a regular basis.
The dividend income received by the unit trust fund is also subject to tax, however capital gains are generally tax-exempted. You should consult an independent tax consultant to enquire details of related matter on taxation for investing in unit trust fund.
How to know whethet he is authorised or not? A registered UTC is issued with an Authorisation Card by FIMM which must be produced when approaching a potential client. If not, insist to see the same and ensure its validity.
You should expect the UTC to deal with you in an open, honest and professional manner. The role of a UTC is to actively provide information during his “interview” with you and thereafter, on an ongoing basis to review your portfolio of unit trust investment as and when the economy or your personal circumstance changes. He should recommend portfolios that best suit your needs, personal circumstances and financial goals.
Many of you may not realise there is a switching function. Yes, and learn how to use it. Therefore, when the tide rises, don’t just grin away. Remember, you won get the profit if you don’t sell. (Or, switch to another unit trust.) You may request the proceeds from the sale of your units to be reinvested in another unit trust fund offered by the same UTMC.
Sometimes, the ‘complex’ terms may not be so complex after all. For example, One of the most common mutual fund terms is expense ratio. What does it mean? Expense ratio simply means the cost to operate your fund. This includes administrative fees, management fees and other expenses related to fund.
There is a scheme whereby you could transfer some of your EPF money to unit trusts. You may sell your unit trust fund at any time in the normal manner. However, the proceeds from the sale will be paid by the UTMC directly to EPF, to be re-credited into your Account 1.
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