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There are many unit trusts funds from which to
choose, but having considered the type of fund or funds most likely to meet
your needs, you have already narrowed down your choices considerably.
Do's and Don'ts of Choosing a Unit Trust Fund
Do
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Decide which type of unit trust fund meets your saving needs.
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Shop around for a reliable unit trust company
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Check whether investment limits, frequency of income payments, etc, are
suitable
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Check past performance records
Don't
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Don't choose any unit trust fund just because its performance has been
good, make sure it is the right fund for you.
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Don't pay too much attention to short term performance, good consistent
performance over all periods is the best lead.
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Don't decide on a unit trust fund just because it has low charges, good
performance is far more important
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Don't borrow to invest in unit trust unless you are absolutely aware of the
risk involved.
The next logical step is to decide which unit trust fund to invest in.
What To Look For?
A random check will confirm most, if not all, investors would look at the
performance or investment results.
Unfortunately, it is impossible to predict a unit trust's future investment
performance. This will depend on the type of fund, the general market trends
and the investments which a fund manager picks.
Most managers would provide the past performance tables that normally show
the total returns since inception or how much an initial investment made
several years ago would be worth today with any income reinvested.
Look at the performance of the funds but do not pay too much attention to
period of a year or less - external factors beyond the control of the
managers may have influenced results - a high flyer may not stand the test
of time. Ideally, a fund showing consistent performance over a long period,
the longer the better.
Check the performance of a company's other funds to make sure that it was
not just a bit of luck with one fund.
Do not let another type of fund take your fancy just because it has produced
better results than the one you had initially chosen. It may be more risky
and may not meet your requirements.
However, be warned, past performance figures are no guarantee of the future.
A fund that has performed well in the past may not do so in the future and
vice versa.
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