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In the past, there were numerous efforts instituted by the local authorities to
promote unit trust funds which are relatively unheard of ten years ago. Many people
are familiar with stock investments but are unfamiliar with unit trusts.
The regulatory framework, from time to time, has been revised and upgraded to ensure
proper development of the industry. New rules and regulations are being introduced
to protect investors while liberalizing the industry.
Unit trust companies continue to hold seminars or talks aiming at educating the public
on unit trust as an investment vehicle. Today, a large majority have some ideas what
a unit trust is about but unfortunately it is still not the favored investment mechanism
for many local investors. Why is it so? Perhaps that is the question many outsiders
are pondering.
The obvious reason is the mentality of a number of investors who hunt for "quick"
profits. Despite knowing all the benefits of unit trust investments, many people
still prefer to bet directly in the stockmarket as they reason that they can make
better money by themselves (retail investors account for 70% of the total local market
volume with the remaining being institutional players). They claim they can protect
themselves better.
How true is that claim and more importantly how consistent is their investment outcome?
Investing in financial markets is not as simple as it appears. You need to determine
the value of your investment after a period of time compared to the original capital.
Trying to evaluate the relative performance of your own investment over the years
may be hard but there is a high likelihood that you would be surprised by your underperformance.
Changing economic conditions will always result in a volatile stockmarket environment
and even the best fund managers will suffer a decline in the value of their funds
in a bearish market. So what is the probability that you will "consistently"
beat the market with all your tips based on rumors and amateur charts?
What is the impact on your hard-earned money if you are a margin player on the second
board, motivated by fast gains. You were probably one of the many who were forced
to liquidate your stock holdings during the recent market turbulence.
While it is reasonable to argue that even the best fund managers did not escape a
heavy downturn, the fact remains that if you had invested in unit trust funds managed
by proven fund managers, your losses would be taken care of or minimized. If you
look long-term, you will be glad to see your money has started to grow again.
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