Unit Trust and ETF InvestmentsA Unit Trust is one of the simplest ways to invest in your future. It is a collective investment scheme, meaning that a number of people pool their money in a fund, that then buys and sells shares, cash or bonds on their behalf. CLICK here for more ABSA details.
Stokvels, mutual funds, equity funds, unit trusts - to thousands of South African investors all of these are more or less the same thing. To a certain extent they are quite right. Many individuals cannot accumulate large enough pools of money to give them access to an expensive service or product. In the case of Stokvels - the original term was probably "stock fairs" - the individual then uses the pooled money to buy goods in bulk at a lower price, or to negotiate better returns or loans at low rate of interest.
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If you are investing for the first time, unit trusts are a good introduction to the world of wealth building. This is because you can use relatively small sums to invest in assets, like share portfolios, that are ordinarily only available to wealthier individuals. You can invest monthly, through a debit order or in lump sums.
However, there are some pitfalls to avoid if you want to increase your chances of reaching your investment goals.
ETFs are passive investments, they merely replicate the indices of shares chosen by the stockmarket. They therefore are considerably less risky than actively managed investment funds and suit the first time and conservative investor. ETFs are passive investments, they merely replicate the indices of shares chosen by the stockmarket. They therefore are considerably less risky than actively managed investment funds and suit the first time and conservative investor.
1. ETFs are completely transparent, they publish their holdings every day on websites, unlike most investment products which do not disclose their component holdings.
2. Investors can invest from R300 per month or from R1000 for lump sums, which are very low hurdle rates to become investors in the stockmarket.
3. ETFs/ETNs now cover all asset classes and investment sub-sectors, making them ideal as the building blocks in long-term investment portfolios.
4. You can invest in ETFs yourself without requiring expensive financial advice or the use of financial intermediaries.
Visit : www.etfsa.co.za and the above Heading LINK in RED for full details.
Wondering whether to invest in an Exchange Traded Fund (ETF) or a Unit Trust Tracker ? Or which brand name you should choose? Look no further than this detailed report, compiled by Magda Wierzycka, the actuary who heads up the Sygnia Group. Unpicking the layers of fees around investment options is notoriously difficult. However, if you don’t understand the full costs, you can’t pick the tracker that will produce the best returns. Thankfully, Magda has taken the complexity out of comparing the many tracker options available in South Africa. The full cost comparisons are laid bare here. This has been among the most popular articles on Biznews.com this year. – JC
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You have a couple of hundred rand per month that you would like to invest and you have decided that you want to go the passive or index option. You like the idea of DIY and on top of that you are cost sensitive…you have also heard that unit trusts are expensive and if you can believe the advertising claims of ETFSA and Satrix* about being the cheapest way to invest, then you would be foolish to opt for anything but an ETF. But are ETP’s (ETF’s and ETN’s) really cheaper than unit trusts and even if they are, are they as safe as unit trusts (from an investor protection point of view) ?
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ETF ( Exchange-Traded Funds ) Explosion
On the whole, EFT's are the Financial Innovation of our generation.
ETF's are both easier to use and cheaper than Unit Trusts, with costs generally below 1% per year, while Unit Trusts are typically around 2 %, with additional upfront costs.
ETF's are a Disruptive Innovation that is affecting the business models of many operators in Financial Markets.
ETFs Come to the Fore Read Article on : www.moneyweb.co.za
CLICK the above LINK in RED to read the Full Article published in The Citizen on 23/12/2015.