Please note:

The information provided below is a general breakdown of what unit trusts are and how they can be useful in building an investment portfolio. This information should not be seen as financial advice. We encourage you to please consult with a financial advisor to find a plan that will be best suited to your financial situation.

What exactly is a unit trust?

Unit trust funds are an affordable way to start investing in the financial market. Your investment is pooled with the investments of other investors in the fund. A fund manager will make the best investment decision on behalf of the unit trust fund to grow your savings. Your investment is called a 'unit' which is allocated according to the amount of money you have invested. You can also decide when and how many units you would like to buy.

What are the key benefits? 
Unit trusts are beneficial for people who are looking for ways to use small amounts of money to take on an investment that comes with a wide range of benefits for future diversity. Your money is combined with the investment of other investors and is used to pool the funds into investments such as bonds, cash, equities and property to name a few. The investment manager will choose an investment that will be beneficial to you and your fellow investors. It gives you access to a wide range of investment opportunities compared to choosing a single investment that you will invest into directly. 

How will my unit trust fund grow?
Any investor would love to see a good return on their investment. Understanding how unit trusts work can make it easier for you to choose a fund that will be best suitable for your needs. It is crucial to know that unit trusts tend to grow in one of three ways: 

amount of time you remain invested, you could make a capital gain based on the values you have invested in. 

Dividends. For someone who is investing in things such as shares, you will be paid a dividend at regular intervals. The dividends which are made through these shares are then divided among investors in the fund. 

Interest Income. An important aspect of investing is knowing the impact of the interest rate your investment has. You could experience healthy growth over some time or one that takes a while for you to reap the rewards of your investment. Should your fund invest in things like bonds or banknotes that pay in interest, you could see a sizeable growth in returns.

What is the investment risk? 
Calculating your investment risk can let you assess if an investment is worth taking on. While this definition will differ from investor to investor, it is crucial to be aware of how much risk you are willing to take on. While investment returns are not always guaranteed, having a good investment manager who will manage your investment on your behalf can help you make smart money. There is however also a chance that you might end up with less than what you invested if you withdraw after a downturn. Speaking to your portfolio manager can help you assess if the risk is worth taking on or if it is better to direct your energies towards an investment that will give you better returns.