Unit Trusts

What
When you invest in a unit trust, you are pooling your money together with many other investors. For a fee, a professional fund manager invests this pool of money in bonds, stocks and other instruments to reap returns consistent with the stated investment objectives of the fund. The potential returns vary from 6 per cent to double-digit figures.

Pros
Your investment are managed by professionals. Through unit trusts, you are exposed to a wider pool of equity stocks and gain better diversification.

Cons
Unit trust investments are not without risks and capital can be lost. The minimum investment amount is low at $1,000.

Best for
It is often recommended for new investors and those who want to gain diversification at lower cost.