Unit Trust: 3 Ways To Invest In Unit Trust

Unit Trust investment start-up made easy (either with money or no money)

1) Lump Sum

· Your excess money (your under utilized cash) that you want to put as a savings.

· One time investment or you just top-up whenever you want. Let say that you already started your investment with RM1,000 in DALI 1. After 3 month, you decided that you want to invest again about RM2,000 in your unit trust account.

You just need to call your consultant, give them the cheque/bank-slip to your consultant. As easy as that. You can do anytime throughout the year without any string attached.

· Minimum initial investment starting from RM100 to RM1,000 for selected funds

· Cash investment transactions are by cheque either personal/banker’s. Or you can always bank-in your investment money via counter in CIMB Bank or Maybank and retain the receipt or bank-in slip to give to your consultant.

Ask from your consultant the account number.


2) EPF @ KWSP – A/C 1

· EPF have come out with new strategy to enhance or maximize your retirement savings

· Account 1 in EPF (consists 70% from total contribution in EPF) is solely for unit trust withdrawal (I think later on, or already, members can use for insurance too)

How it works? Members can invest 20% of savings in excess of Basic Savings in Account 1 (minimum at least RM1, 000)

· The requirement is not rigid as before. Now everyone can invest as early as 18 years old

· For example, Miss A is 27 years old. She has RM17, 000 in account 1.

The basic savings that require for 27 years old of age is RM 12,000. The calculation is simple.

RM17,000 – RM12,000 = RM5,000

RM5,000 x 20% = RM1,000

So Miss A can invest RM1,000 into Unit Trust

· It is advisable to practice consistent contribution every 3 month. Why? The cost per unit will be lowered, if invest consistently. We called this method is Dollar Cost Average @ DCA.

DCA is used to average down the cost and make sure you getting return from Capital Gains. Capital gains is returns made from price increase.

· What you can do now is to know what to do whatever the market situation is. For example, during upward market, you can invest in different fund or support level or par value fund.

Sideways market is the best time to accumulate more units. Meanwhile, when the downward market, we can practice DCA :).

Also applied to regular savings method. :)

· Please refers the table below by clicking to the table for clearer view..



3) Regular Savings

· Regular Savings using Dollar Cost Averaging is very good way to make sure your money/savings grows.

· The compound interest concept is applied in this method of investing. I quote from KC Lau ‘Unit trust is an easy means of obtaining a spread of investment.

It is suitable for passive investor, who doesn’t want to, or doesn’t have extra time to invest their cash savings. For an investment capital to grow, we must not underestimate the power of compound interest - what Einstein calls the “8th wonder of the world.”’

· I quote from KC Lau on how to apply compound interest in unit trust investment. I found this one is very informative for those who wants to do saving for future. I quote:-

‘No matter where you put your money, provided the money is still yours, compound interest will work for you. Consider the following places where you save your money

o under your pillow - compound interest still works, but with 0% interest rate.
o in saving account - compound within 1-2%
o in fixed deposit account - compound 3.7% p.a.
o in unit trust - compound with a wider range, say -5% to 20%
o in shares - compound with an even wider range, say -50% to 100%
o in properties - hard to predict. If you buy a house that’s never completed, you lost your capital plus interest charges of your mortgage. However, some experienced property investors can get their money compounded many fold per annum.

But if you spend the money instead, I guarantee that compound interest won’t work for you anymore, because the money is no longer yours. You can even use borrowed money to invest.

For instance, you get a home loan to buy house, or borrow money from your parents to invest in stocks. If you manage to get a higher return than the interest charges, compound interest is working for you.

But if you borrow money to spend, compound interest is working against you. The harder it works, the poorer you are.

In order to let compound interest works its wonder in unit trust investment, you should:

1. Never repurchase your fund unit - let your capital stays in there as long as possible. When you want to lock the gain from time to time, use switching facility.

2. Review your portfolio performance regularly - make sure it is giving you positive return as often as possible.

3. Invest as early as possible - start investing when you are still young. It will give you the longer term to invest and get through all the equity roller coaster ride when you reap the return at the end.

4. Invest as much as possible5. Never get tempted to spend your earning - just leave your return in the fund. Forget about it! Leave it until you reach your financial freedom.

· Who should do the auto debit/regular savings method? Suitable for those who want to do savings, such as fresh graduates, or just started work. The parents who have education plans for their children or maybe for those who has retirement plan.

· I give a few examples.

Scenario 1:-

Parents A that have one daughter aged 5 years old. They estimated the funds for their daughter to further studies in America in 12 years time would be much higher compare to the cost nowadays.

Let’s say that they need about RM180, 000 for their daughter, they need to save up in Unit Trust consistently every month about RM500 This is to make sure in 12 years time, they will have their RM180, 000 (the interest rate is 15%) for their beloved daughter.

Scenario 2:-

Mr. B is 25 years old guy. Have stable job in multinational company. He had foreseen that he will be poorer after his retirement if he only relies on his EPF. So he started to savings in Unit Trust RM500 consistently every month using auto debit in his Maybank account.

In 25 years from now, he will get his investment grows to RM1,642,037 (the interest returns is 15%)! This is when the compounded effect took place.

· The initial minimum investment is started from RM100 to RM1,000 and continue to do auto debit (from Saving Account CIMB, Maybank).

· How to do it? Simple, just say to your consultant, you have to sign a few documents and the rest, let your consultant handle it for you.

· Affordable amount using auto debit monthly. For example, RM1,000, RM500, RM300, RM200, RM100, RM50.

· For compounded interest calculator, you can always visit this website :-

http://www.moneychimp.com/articles/finworks/fmfutval.htm

Unit Trust: Role Of Consultant. MUST READ!!!!

Role of Consultant MUST READ!!!

· To do active monitoring by

1) To practice DCA/Average down the cost per unit
2) Understand the market cycle such as the 1:3:5 RULES.
3) Giving information about the market and any relevant news to the investors
4) via email/text messages/call
5) Practice the buying and selling strategy. 1st strategy is advice clients to buy more units when the price is low. 2nd strategy is to sell when the price is high. This how you get the capital gains.

· Switching

The consultant will advice when is the good time or necessary time to do switching to maximize the return and minimize the risks. The switching facility is free and can be use 4 times per calendar year. For example, Mr. C invested in small cap fund (fund 1) in January 2008.

Later he found out that the fund is highly to aggressive and he does not want to lose his principle investment. He asked his consultant to switch his investment to less aggressive fund in March 2008.

In fund 2, he making more money and suddenly the market is down. So he switches again to money market fund which is more stable and does not have major effect if the market is down.

After the market goes up again, he switch back to fund 2. It means Mr. C have used his 3 switching facilities and only 1 left before year 2008 ends.

· Redemption

The consultant will make sure once you have reached the target of returns, they will lock-in the profit, whether you want to reinvest it or taste the profit.

The consultant make sure when you have reached your return target, let’s say, 20%, they will advise you whether you redeem it and reinvest it or maybe just let the money grows. It’s up to you to redeem or just let it grows in 3-5 years time.

The duration for unit trust is middle to long term, which means 3-5 years of investment. The process of redemption is 3-7 working days.

The profit will go directly to you, either bank-in in your account or, cheque to your name.

Unit Trust : Syariah Fund Made Easy

What is Syariah fund? Syariah Fund Made Easy

• Not investing in non-syariah sectors/companies such as conventional banking, gambling or lottery, liquor etc.
• Have their own syariah committee to advice and give guidelines on the funds. For instance, CIMB got their own syariah committee whereas they give advice and annual report on the funds. They monitor closely the funds and make sure the fund is following the syariah principles and all.
• Proven track records show that our syariah funds give more that 15% up to 27% per annum. DALI 1 was launched in the year 1999. After 9 years, they already making profit as much 234.55%!! Meanwhile for DALI 2, since it launched in 2004, DALI 2 already making profit about 116.72%! You can always refer to our fund fact sheet. If you don not understand, just look at the graph. The graph tells it all.

Please go to:

http://www.cimb-wealthadvisors.com/resource_centre/DALI(DALI)__Feb08.pdf

and

http://www.cimb-wealthadvisors.com/resource_centre/DALI2(DALI2)__Feb08.pdf

• Please refer the table below. Our syariah funds is the best in the market and we got the best ranking from Lipper.

Unit Trust : ASB Made Easy

ASB (Amanah Saham Bumiputera) made easy

• One of the investment types or funds offers by PNB to encourage Bumiputera to investing in Unit Amanah (a.k.a. unit trust).
• Same application and investment method like Unit Trust. ASB also invest in many companies in the stocks or shares market, or perhaps government securities; whichever they can get profit from. They also have their own fund manager.
• Flat price only. They sell at RM1.00/unit all year round.
• ASB gives Dividends and Bonuses only at the end of the year. For example, PNB always declared dividends at the end of the year. Last year, 2007, they declared dividends for ASB is 8%. Which means, if the investor invested RM10,000, they only get RM800 for the dividends.
• No switching facilities or capital gains (from price increases).
• Can invest through all the major banks or even pejabat pos too. They can make withdrawal from there too.
  
• ASB give returns from 6% to 8% per year. Last year they declared 8% for dividend and 1% for bonus.
• Very good for a safe investor who looking for stable and 'ngam-ngam' returns. Not suitable for a brave investor who looking a higher returns and more than 'biase-biase' return.
  

Unit Trust Made Easy Part 2

Unit Trust Made Easy

• Same like ASB (or other PNB’s Amanah Saham) in matters of application and investment methods.

• The only differences are Unit Trust have fluctuate price or very dynamic price (Nett Asset Value price). Let’s say that the price for DALI 1 yesterday is RM1.00/unit. Today the price might go higher or lower, perhaps RM0.98/unit or RM1.0095/unit. Sometimes it goes below par value. ASB always at its par value which means the price is never go cheaper that RM1.00 or higher that RM1.00.
  
• Unit trust gives Dividends, Bonuses, and Capital Gains.

Dividends is profit give in RM | Bonuses is profit in more units | Capital gains is profit from the increases price of the fund

• Unit Trust can give returns from 10% to 15% per year. The profit can go higher depending on the market. Last year for DALI 1 (syariah fund), the profit is 49.52% and DALI 2 is 50.10%. To be safe, we always give an average return that we sure that can give to our clients which is 10-18%. We just do not want to over promise and under deliver. :) For conventional funds, we have Premium Capital Fund (PCF) that making profit about 51.13% last year. Beside that, we have Double Growth fund that give profit about 55.92%. Our fund fact sheet tells it all. Please go to http://www.cimb-wealthadvisors.com. Look for fund fact sheet under fund updates.
  

Unit Trust: DALI THEME @ DALI 3

Hye all,

CIMB will launch a new and improved version of DALI (one of CIMB's FAMOUS Fund and probably in MALAYSIA).

DALI THEME is the improved version of DALI 1 (CIMB Islamic DALI Equity Growth Fund) and DALI 2 (CIMB Islamic DALI Equity Fund).

DALI 1 give return about 18% per annum last year and the price now is RM 1.0716 (as for today), meanwhile for DALI 2 give return about 23% per annum last year and the price now is RM1.7690.

Some of the insight of this Fund:-

• Invest in 4 major and developing sectors in Malaysia
  
• The improved version of DALI 1 and 2
• Invest in stocks of most promising sectors like Oil and Gas, Plantations, Construction, and Retail or Consumption sectors.

Why DALI 3?
1. A defensive economy driven by domestic factors;
2. To participate in emerging investment themes (both
global & local) to capitalize on the promising sectors;
3. A domestic fund with no foreign currency risk
(possibility of Ringgit strengthening too by year end)
4. Shariah compliant – Investments in an ethical way, approved by
experienced Shariah advisors

The MOST INTERESTING is...

Now, DALI THEME @ DALI 3 is selling in fast number and the INITIAL OFFER PRICE is just RM 0.25 / unit only!!! This offer is available until this 19 MARCH 2008.

Unit Trust: Dana Al-Ikhlas OR CIMB Islamic Equity Fund

Hye,

Some useful information about DANA AL-IKHLAS or newly known as CIMB Islamic Equity Fund

This unit trust fund in ONE of the top performing ISLAMIC fund in MALAYSIA.

It is proven to be top 5 among ISLAMIC FUND in MALAYSIA as published in PERSONAL MONEY magazine.

Associated with CRYSTAL EQUITY FUND (conventional). This fund invests in a lot of CONSTRUCTION sectors. So it should benefits from many 9MP MEGA PROJECTS.

How to invest?

By Cash investment (Minimum Initial Investment is RM500)


Time of Investment?

3-5 years


Who should invest?

Investors who are looking for consistent returns of capital and invests mostly in EQUITIES (Min. Equity investment exposure is 70%) that follow to the SYARIAH principles. Also 20% OFFSHORE exposure for those who seeks global investment.


I will update later about this fund. For the time being, bear with me...