Some of the promotion tag line are very creative, eg. "Young man, don't only wet in pubs la, save some money, buy unit trust and save for "lou po bun"(savings to get married)." Hey, do I look like someone who wet a lot? I have not been to pubs since 23 and I have already got married,:P.
Anyway, back to the unit trust topic. Most of my friends who are working in the city bought unit trust, a lot of them are selling too. Some also opted to leverage on their EPF savings to purchase unit trust, as they are worried about the way EPF manages our money. However, many asked me the same question these days, "Should I sell my trust fund?"
I sold all of mine back in 2007, anticipating a recession which didn't happen. Ever since then, I never bought in a single fund. I was one of the very first trust fund advocates and investor among my peers. I am still able to recall that we are able to count the number of trust funds available in the market back in 1996. Now, you just lost count.
My stand is still neutral now for trust fund. Reason being that a lot of people living in the city are lacked of financial knowledge. This is the reason for buying as well as not buying trust funds. If you do not know how to manage your money, probably investing in a trust fund might help you to fight against the rising inflation. However, many of the fund investors are investing based on the city "herd-mentality". Their favourite tag line is, "If you do not know how to manage your wealth, let the professionals do it".
People are working very hard to make extra money in the city but didn't have extra time to learn how to manage it. This is why when I asked my friends on funds they have invested, they couldn't even tell me the ratio of their funds distributions (ratio of cash, equities, bonds, properties etc). Many are unable to tell me which sector of equities their funds are focusing on and what is their funds' investment policy. When asked about the difference between Money Market Fund and Equity Fund, a typical answer would be "huh? got difference one meh?" I hope you are not asking yourself those questions now. Even if you are, it's never too late to learn,:).
My current view on trust funds: a long-term investment tool. If you do not know how to manage your wealth, keep everything in cash and gold now. Trust funds are not good for short-mid term investment in the current financial climate. One of the reason you lost count on the trust fund counters is because the number of trust fund investors is growing at an exponential rate due to overheated economy. Economy is extremely hot in countries such as China, India and Vietnam. The recent economic shocks has sent various equities market value back to more acceptable level, bringing down trust fund's NAV (Net Asset Value) significantly. The worse has yet to come.
What if you are still on a trust fund investment plan? Keep whatever that you have invested, unless those are junk trust funds. (I will write on analysing trust fund soon if possible) For future investment, IMHO, I would choose to divest into foreign currency or gold instead of trust funds.
Does your trust fund manager care about losing your money ? No, they don't. They still get their sales commission and professional fees annually. Life goes on. This is why I don't trust them.
My personal advice before investing in trust funds, always take note of these few things:
- Fund Distribution (Ratio of Cash, Equities, Properties, Bonds)
- Risk (high growth high risk, stable growth low risk)
- Investment Policy
- Moral & Ethics (in case you don't invest in gaming or tobacco companies)
- Past dividend and bonus splits records
- Compounded Annual Growth Return (CAGR)
- Performance of other funds within the same financial group
* the above advice are purely my personal opinion and I will not be responsible for any losses incurred based on advice given.
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