Unit Trusts

[jambai]

Surely they can crash if the market crashes ? isnt things like a bank's fixed deposit the only "true" guaranteed investment ?

yes that is why it is called the risk free rate.If market tanks 40% the best unit trust out there will probably tank less than 30%

 

[Griz]

Surely they can crash if the market crashes ? isnt things like a bank's fixed deposit the only "true" guaranteed investment ?

Banks aren't what they used to be but yes like government bonds are 'risk free' but then again you only earn around 7% on them which means you arent making anything after inflation.

 

[Skydrops]

Surely they can crash if the market crashes ? isnt things like a bank's fixed deposit the only "true" guaranteed investment ?

Should there be a "market crash" you're pretty much screwed no matter where your money is... in, asset, etc. Europe, China and USA may be setting us up for a lovely surprise in the next year or two.

Every thing can or may lose value.

Your house could burn down or, you can not find people to pay the rent or sell it to, to make a profit.

You should determine the risk you need to take, over the period that you are able to take it. Then select appropriate place that matches the risk you are willing & able to take, for the returns that you need. Don't be greedy, your life's savings should not be in a poker game...

I always feel one should top up on one's education if you have the funds available, never stop learning.

 

[Cius]

Management fees for most unit trusts are very high. Still, if you really want one perhaps look at Nedbank Rainmaker. Its been very good. Personally I prefer investing myself in ETF's like Satrix Divi or Betta Beta.

 

[Skydrops]

Management fees for most unit trusts are very high. Still, if you really want one perhaps look at Nedbank Rainmaker. Its been very good. Personally I prefer investing myself in ETF's like Satrix Divi or Betta Beta.

How long have you been doing it your self, education, what are your losses to profit ratios, and how much time do you spend on this?
What risk are you taking, with your own monies, and what guarantees or backups do you have, for your self?

Most people, should not handle their own monies... :erm::wtf:

You may have the experience, but most people may not have it... and thus those high cost they pay for expertise, they pay for good reason, hopefully.

 

[Cius]

How long have you been doing it your self

5 years, ever since my dad insisted we learn how to invest ourselves by giving each of his kids R15K that we had to purchase ETF's with.

education

Two engineering degrees. Having a mathematical background and understanding numbers (especially TCR compound interest) helps.

what are your losses to profit ratios

My 5 year return seeing as I just passed the 5 year mark is 11%. That is after having bought at a very poor time (end of 2007 just before the 08 crash).

and how much time do you spend on this?

Er, none? I bought Satrix Divi once back in 2007 and just left it. I noticed that due to all the dividends and interest accruing in my stock broking account I was having a lot of cash sitting around so I bought a few more SatrixDivi last year I think with the excess. Never sold anything. I believe in just getting market returns over a long period.

What risk are you taking, with your own monies, and what guarantees or backups do you have, for your self?

Fairly risky as its almost 100% equity but again, over a long period diversified ETF's are very low risk. Provided you are saving for 10 years + I am happy with the risk.

There are very few unit trusts that consistently beat my returns just buying a basic ETF like Satrix Divi. Add to that the high fees of the unit trusts and I see no need to pay someone else to invest my money.

Most people, should not handle their own monies... :erm::wtf:

You may have the experience, but most people may not have it... and thus those high cost they pay for expertise, they pay for good reason, hopefully.

I can't disagree more. Please read this.

Its the couch Potatoes guide to investing. It has been proven right time after time. Here is a quote on the performance:

Let’s face it: investing successfully on the stock market is hard work. If you want to beat the professionals at their own game, you must be prepared to work at it. Fundamental analysis, technical analysis, share selection, portfolio balance. Decisions, decisions, none of them to be made lightly. Theorise, agonise, and put in the hard yards. No pain, no gain, right? The stock market is the place to be in the long run, but to extract that market premium takes blood, tears, and more than a bit of sweat.

Well, maybe not. Scott Burns is one person who thinks that profitable investing can be a whole lot easier. In fact, he believes that if you are spending more than ten minutes a year on your portfolio you’re overdoing things. What is more, Burns practices what he preaches. Back in 1991 he launched the Couch Potato Portfolio, an investment strategy for those whose definition of hard work is changing channels on the TV.

Scott Burns, in case you’re wondering, is a syndicated financial columnist for The Dallas Morning News. He has gained a reputation for a casual, keep-it-simple style that takes the edge off the often serious world of finance. In launching the Couch Potato Portfolio (CPP), his aim was to maximise gain and minimise pain. No complicated record keeping, no diligent reading of the financial press, no phone calls to and from brokers, no meetings with investment advisors, and no complicated tax returns. In short, maximum benefit with minimum effort.

It all sounds too good to be true, but the reality is that since 1991 Scott’s portfolio has been producing year-on-year returns that average just under eleven percent.

source

Seriously, its easy to invest for yourself. Just open a broking account or do it via the etfsa website. Put money in monthly into something like Betta Beta or Satrix Divi and forget about it. Once you have enough money it will be worth opening an account on the New York Exchange and diversifying across countries a bit via the excellent Vanguard ETF's. Their costs are insanely low, under 0.2% as compared to a unit trust charging you over 3%.

Couch Potato investing beats 90% of unit trusts in the long term, and its easy. Don't let anyone tell you otherwise. Just remember, a couch potato is NOT a trader. You mostly buy, and almost never sell. Its not about trying to beat the market, its about getting market returns.