Dollar-Cost Averaging Principle

The Principle of Dollar-Cost Averaging involves a diciplined regular investment technique which may be applied to maximum effect in unit trust investing. This investing technique intended to reduce exposure to risk associated with making a lump sum purchase. All an investor has to do is to invest a regular fixed sum of money with a selected unit trust fund over a period of time (daily, weekly, monthly, quaterly, etc.). This way, investor does not have to worry about market timing, or where shares prices or interest rates are headed. Regular investment will purchase less units when market is up, and more units when market is down. It safeguards against the market losing value shortly after making investment and limit the downside of an immediate drop in asset value after a lump sum is invested.

Let us assume Investor A decided to invest a monthly savings of RM400 with the fund over a period of 24 months.In the first 12 months, Investor A thus managed to accumulate 8,026.47 units at an average cost of RM0.5980 per unit at market uptrend whereas the average NAV per unit over the period was higher at RM0.6008.During the next 12 months, Investor A manage to accumulate a total of 9,270.36 units at an average cost of RM0.5178 per unit at market downtrend which is lower than the average NAV per unit over the period at RM0.5183.Units will be bought at an actual cost which is lower than the average NAV per unit over the same period by regular investing the same amount of money in the fund irrespective of price fluctuations.

Income from Unit Trust: Distributions and Capital Gains

There are two types of income: potentialdistributions and capital gains. Unit trusts invest in a variety of securities, including stocks, bonds, and/or money market instruments.*

When these securities pay interest or dividends, the fund is required to pass them along to its unit holders (less a portion of the costs of managing the fund).

A bond fund, for example, buys bonds that pay interest, which the fund then passes on to you in the form of a dividend.

Fund distributions also include capital gains realized by the fund when it sells portfolio holdings.

The difference between what was paid for a security and what it sells for is a capital gain or loss. Short-term capital gains (on securities held by the fund for 12 months or less) are typically passed on to unitholders as a dividend distribution.

Long-term capital gains are reported separately as capital gains distributions. You can calculate a fund’s yield by dividing its current NAV by the amount of distributions per share.

How to protect your portfolio - just a guide

1) AVOID LOW-RISK INVESTMENTS SUCH AS FIXED DEPOSITS.
- INVESTORS should allocate their portfolio to funds of various risk-return levels to generate returns the surpass the growth of inflation.
- INFLATION is at 4%-6% in urban areas. Returns on FDs is 3-4%. It means your money is losing its value of 2% per annum. Investing in mutual funds or other instruments are recommended.

2) BUY PROPERTIES AND HOLD FOR A LONG-TERM as properties is the one of the best investment vehicle that help to hedge againts inflation.
- Plan to own a property or investing in property related funds such as REITS, Mutual Funds and etc

3) LOOK FOR MODERATELY RISKY ASSETS such as EQUITY UNIT TRUST and DIVIDEND YIELDING stocks that can provide higher returns.
- Funds with proven track record and reputable fund management company is essential.

4) ACQUIRE COMMODITIES-RELATED securities that will benefit when commodity prices increases.
- GOLD, CRUDE OIL, PALM OIL. How to venture. Well you may not do so directly but via various schemes that allow you to participate.

REMINDER: CONSUMER GOODS ARE GETTING EXPENSIVE. INFLATION AT THE RISE..

remember, the above is just a guide and suggestion based on magazines and atricles by experts. It may or may not suitable for you. For clarification, you may call 012-3290026 / 016-2215364

Unit Trust Investments via EPF Acc1 Fund

The Employees Provident Fund (EPF) or KWSP is a national social security organization. Basically, it helps you to save money for retiring age or in other words, to help you retiring with enough money in the pocket. While you can’t withdraw/use your fund as often as you like, EPF lets you invest some portion of your fund in appointed investment vehicles such as Unit Trust.

Are You Eligible?

You are eligible if:

a) Your balance in Account 1 is not less than the required basic savings amount. Pls see attached Basic Savings Amount Schedule.

b) You are below 55 years old

c) You have not withdrawn from your Account 1 in the last three (3) months from the date of your last transaction.

d) The minimum eligible amount is RM1,000.00 and the maximum amount is 20% of the savings amount that exceed the Basic Savings Amount required in Account 1.

Example:

Age : 40

Total Savings in Account - RM135,000

Required Balance in Account 1 - RM44,000

Excess Amount - RM 91,000 (RM135,000-RM44,000.00)

Eligible Amount for Investment (20% x RM91,000)- RM18,200

If you are eligible, take this opportunity to have better yield with your EPF saving. See your nearest agent today or call 016-2215364 / 012-3290026 for immediate appointment.

All About Unit Trust

Unit Trust basically help you to have a peace of mind of your investment by putting your investment fund to pool which will be managed by professional fund managers.

Unit Trust meant for investors who seek for mid to long term returns. For me minimum 5 years is desirable due to volatility in current market condition. I have investors who invested during 1997 crisis and all the way to 2007 where she redeemed with a profit close to 100% gain. Even though the monthly contribution is small (RM50 per month) but she gained what she wanted.

Unit Trust helps you to manage your investment during the up and down of the markets. How? Fund managers will manage the portfolios by allocating funds in different securities to minimize the risk and thus help to retain investor’s capital at the best position ever.

Returns – realistically I am looking at 10-15% annual returns. Historically, equity returns has been always hedged cash deposit returns. So if we have excess cash, investment would be the better idea. The earlier you start, the more return you will obtain in future with lesser investment amount.

Unit Trust investment is always hedge over inflation. It always beats the inflation rate. Why? Because, it is not CASH, it is in UNITS. All investment is converted to Units and thus when inflation goes up, value of units, assets and portfolios will go up as well on par to match the inflation impact on the equity market. We are now facing an unofficial inflation rate increase. BLR will go up, property price will go up, food prices will go up and we might be facing recession. Therefore investment is essential to secure your cash value in future.

Choosing the correct fund, the good fund managers and good servicing agents are important before investing in any Unit Trust funds, Based on your age and risk tolerance, you may choose funds from conservative up to aggressive.

Markets are beginning to settle a bit although we may still see some volatility the coming months. Periodic investments via cash and EPF will be a good idea to start with.

Do call for more info

Amar
0162215364 / 0122390026