Unit Trust Made Easy

Unit Trust: 3 Ways To Invest In Unit Trust

2008-03-15T23:12:00.001-07:00

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!!!!

2008-03-15T22:47:00.000-07:00

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

2008-03-15T08:52:00.000-07:00

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

2008-03-15T08:33:00.000-07:00

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

2008-03-15T08:22:00.000-07:00

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

2008-02-27T01:25:00.000-08:00

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

2008-02-20T04:47:00.000-08:00

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...

Unit Trust: More About It

2008-02-14T07:38:00.000-08:00

Unit Trust: Glossary Part 1

What is TRUST DEED?

A legal document for Unit Trust that have details and structure the way in which the whole structure of the fund operates. (I'll explain later in more simpler version, i promise!)

What is TRUSTEE?

3rd party institution that been appointed to manage the operation of the TRUST DEED of the funds.

The most INTERESTING Definition are:-

What is CAPITAL GAINS FOR UNIT TRUST?

Returns that we can get from PRICE increase

What is DIVIDEND FOR UNIT TRUST?

Returns Made by Fund Manager (what and who is Fund Manager?

Please refers my 1st post) and distributed to the Unit holder in RINGGIT!!!

What is BONUS FOR UNIT TRUST?

Returns also Made by Fund Manager and distributed in ADDITIONAL UNIT.

Unit Trust Latest Updates

2008-02-12T00:24:00.000-08:00

Hi all,

To be heard that our very own KLSE is predicted to be up until 1700 this year!!!

That's what we consider good news to all of us INVESTORS of UNIT TRUST, isn't it??

Unit Trust Basic Story Telling..

2008-02-12T00:03:00.001-08:00

Unit Trust Introduction

Dealing with people in terms of money accumulation or venturing in unit trust is not an easy task.

The questions that they always asked are ‘Hey, what is unit trust (unit amanah)?’, or ‘is this unit trust (unit amanah) thing is secured investment?’, or ‘Why should I need unit trust (unit amanah)?’

When talking about Unit Trust (unit amanah) or Mutual Funds, people always think about Public Mutual, CIMB Wealth Advisors, RHB Unit Trust and many more.

I personally do not have any clue about unit trust before this and tried to find more information over the net and I found none that can explain in detail about this.

Top 10 unit trust holdings:

Lot of people put the definition of unit trust in a lot of ways.

Taken from our own Malaysia Government portal, http://www.gov.my/MyGov/BI/Directory/Business/BusinessByIndustry/BusinessFinance/FinanceLegislationAndPolicy/FLPUnitTrust/:-

Unit trust funds are investment schemes structured to allow investors with similar investment objectives to participation in the money, debt, equity and derivative markets.

Professional investment managers, who channel their efforts towards achieving investment objectives ranging from regular income to capital growth, will manage funds collected from the schemes.

Unit trusts (unit amanah) are excellent vehicles for individual and corporate financial planning due to their affordability, liquidity and relatively low risk nature.

Let’s simplified it to simpler & chewable terms:

Pooled Money | Collective Investment Scheme | Managed By Professional Fund Manager | Compounding Effect

Pooled money
Money of many investors put together for a sole purpose.

Collective investment scheme
A scheme whereby an entity is set up to pool money from many investors who share the
same investment objectives.

A full-time fund manager then invests the pooled money on behalf
of the investors in securities or other investments in accordance with those objectives.

The basic forms of collective investment schemes are unit trust -based vehicles, share-based
Corporations such as closed-end funds, and pension and provident funds

Professional fund manager
Group or individual of people that professionally manage various of securities (shares, bonds etc.) assets (e.g. real estate), to meet specific investment goals for the benefits of the investors.

In this case, via collective investment schemes, e.g. unit trust

Compounding effect
The concept of adding accumulated interest back to the principle, so that interest is earned on interest from that moment on.

The act of declaring interest to be principle is called compounding.

Let see one EXAMPLE now:

Let say we play a game of golf and made a friendly bet of 10 cent on the first hole, with the best doubling on each hole.

As we’re all concern, we know that in the game of golf, there were only 18 holes.

So how much can we get of the game amount from the 18^th hole?

Hole 1	10 cents	Hole 6	RM3.20
Hole 2	20 cents	Hole 7	RM6.40
Hole 3	40 cents	Hole 8	RM12.80
Hole 4	80 cents	Hole 9	RM25.60
Hole 5	RM1.60

At 9^th hole, the bet is RM25.60. How much could it be on the 18^th hole? RM100? RM500?

Hole 10	RM51.20	Hole 15	RM1,638
Hole 11	RM102.40	Hole 16	RM3,276
Hole 12	RM204.80	Hole 17	RM6,553
Hole 13	RM409.60	Hole 18	RM13,107
Hole 14	RM819.20

See.. At hole 18, the bet amount turning to outrageous numbers of RM13, 107!

When given enough time, the power of compounding can turn very small amounts of money into huge sums.

THE CONCLUSION

To ease my pain of understanding that time, I concluded UNIT TRUST as this:

UNIT TRUST is one of many form of investment that some people might consider for wealth accumulation or form of savings.

I called it collective investment scheme, which pools the savings of investors with similar investment objectives in a special ‘trust’ fund managed by professional fund managers.

All the ‘trust’ is invested in money, debt, equity and derivative markets.

The pooled monies in the unit trust fund will then be invested in a diversified portfolio of securities ranging from regular income to capital growth and other assets in accordance with the unit trust fund’s investment objectives and as other assets and as permitted under the
Securities Commission’s Guidelines On Unit Trust Funds
and underlined under Securities Industry Act 1983