Investments Archives | Page 6 of 10

What Exactly Are Mutual Funds And Unit Trusts?

Before investing your hard-earned money, it is a good idea to educate yourself about the different types of investments. Let us start by defining both Mutual Fund (MF) and Unit Trust (UT).

MUTUAL FUND

MF is an investment that gathers the investors’ money into a pool to make multiple types of investments known as the portfolio. The compensation of the investment managers rely on how well the fund performs. Thus, you can rest assured that they will work hard to make sure the fund grows well.

Derived by accumulating the status of the underlying investments, the performance of the mutual funds are typically tracked as the change in the total market cap of the fund.

Players

There are two important entities when taking on the Mutual Fund. I am pertaining to the professional investment manager and the shareholder. Professional invest managers operate the MF by investing the capital and attempting to produce gains for its shareholders. Therefore, each shareholder participates proportionally in the gain or loss of the fund.

Process

As an example, let us consider Canada’s stock market. Gabby wants to try his luck at the Canadian equity market by investing in the S&P/TSX Composite Index. It consists largely of the energy, materials, and financial sectors with different percentages allocated. Performance of the MF is tracked as the percentage of change to its overall adjusted market cap.

UNIT TRUST

UT is distinguished from the MF as it follows a trust structure. Rather than putting the gains back into the fund, it provides profits straight to the individual. This investment scheme is available in Australia, South Africa, Namibia, Kenya, Fiji, Ireland, New Zealand, Malaysia, and Singapore. Both the local and foreign funds are regulated as collective investment schemes in our country.

It works by pooling money from multiple investors to invest in a portfolio assets in lined with the stated investment approach and objective.

Players

There are several important entities when taking on the Unit Trust. Professional investment managers or fund managers operate trusts for gains. The trusts as well as its rights are owned by the unit holders. The unit holders and the fund managers are mediated by the registrars.

Process

The process that the UT goes through depends on the goals and objectives of the investment. The value of the assets in its portfolio is equates to the amount of units issued multiplied by the price per unit. Afterwards, you must subtract other costs such as management and transaction fees.

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COMPARISON

Both the MF and UT gathers the investors’ money into a pool to make portfolios, which are managed by the professional investment manager. The major difference between these two investment schemes is in its structures. Basically, Mutual Fund issues redeemable shares while Unit Trust issues units. It is up to you to find an investment scheme that suits your lifestyle.

Sources: 1, 2, 3, 4 & 5

The Importance of Your Family Wealth Structuring: What You Need to Know

As the head of a family or household you’ll understand just how important your finances are. The money you have is what keeps your home – and indeed your personal lives – in order, and without properly managing this you run the risk of getting into monetary troubles.

Knowing exactly what to look out for and how to effectively manage money is quite a challenge – especially if you lack experience in handing your finances. There are a variety of different aspects to consider such as where you should invest your money, how to ensure you have enough money and what’s the best course of action for your financial future – certainly a headache for many of us.

Luckily though, there are alternatives and also ways you can ensure you have a solid family wealth structure. In this post then, you’ll find a number of different examples of financial concerns and expenses and why you need to manage these. Then we’ll discuss what you can do to prevent any problems and offer some useful tips for making the right choices with your money.

Family Expenses

In our day to day lives, we have plenty of different things we need to spend money on each month in order to maintain a decent standard of living. Naturally, this is increased depending on if you have more than one child, and ultimately without keeping these in check you may run into debts. Here is a breakdown of some the main expenses you’re likely to encounter:

Rent or Mortgage Payments – regardless of whether or not you own or rent a property, the chances are you’ll have some form of payment to make each month. These are often a significant part of your monthly costs.
Food bills – the food you eat is another necessity which can again become more and more expensive over the years with a growing family.
Utilities – the bills you have to pay can be spread in different payment plans, but the reality is that every day you’ll be adding to your expenses with your use of gas, electricity and water.
Taxes – you’ll also have to pay taxes which more often than not will be taken from your monthly salary, what’s more you can also pay council tax on your home or accommodation.
Travel – another typical expense is for your travel. From your commutes to work, to taxiing your family around you’ll have to pay for fuel, tickets and/or fares.

Additional Expenses

These are just the basics though, the wealth management of your family can also cover additional costs like:

Leisure – the time you spend enjoying your life or socialising can add up over the month.
Clothing – you’ll need to buy new clothes fairly regularly, especially if you have a growing family.
Maintenance – there may be unexpected issues with your home or your appliances which need to be fixed.
Childcare – if you work full time and have a young family there’s also childcare costs that you’ll need to factor in each month.

All of these are aspects you should be budgeting for on a monthly basis.

Savings and Investments

With the money you have left over, you also need to consider what you’re going to do with it. The most obvious step is to open a savings account, but there are also real investment opportunities you should look at.

Heading to the stock markets is one avenue you might want to go down, but another popular choice is to buy additional properties as lets, or to renovate and sell for a profit. With this though you’ll need a decent understanding of finance and how the markets work to ensure you see a positive return.

The Simple Solution

While you can simply look into the markets yourself, or budget each month to manage your investments, if you feel you lack the expertise needed to keep your money secure there are other simple solutions. A sensible choice then is to put your trust into a financial expert to take care of the responsibilities for you.

There are plenty of companies and firms such as Withersworldwide who offer a variety of financial management services, from offering advice on investments to simply helping you look after your money more effectively. It’s also worth choosing an established company with a long history of success, that way you know they’re obviously doing something right with their services.

The Bottom Line

As aforementioned, the last thing you’ll want is to put your family’s welfare at risk by making poor decisions with your money. Consider the above options with investments, or make the smart move and search for expert advice and leave your finances in safe hands. This way you can count on a more secure future, not just in the present but for many years to come.

New to investing? 5 tips and tricks to get you started

If you’re the sort of person who stays up at night worrying about the price of milk, or who would rather hide cash under the mattress than open an account, investing might not be for you. For the rest of us, though, the sensible, well-researched use of investing can be a way to maximise your money. If you are keen to make your money work harder and have long-term/short-term goals than need funding, it might be time to check out the IG glossary of trading terms and start making some well-informed decisions to grow your wealth.

Of course, if you’re new to world of investing it can all seem a little wild and confusing, but below are five essential tips and tricks to get you started.

Do your research

While you might decide to contact a financial advisor or speak with numerous investment experts about what they think you should do with your money, ultimately it’s your decision. For this reason, it’s absolutely crucial to do your own research and ensure you know the difference between the many different kinds of investments from opening a savings account to buying stocks and shares. Whatever you do, don’t start investing without reading up on the jargon (much of which will sound complicated but is actually rather straight forward, see the glossary linked to above) and make sure you weigh up your options.

Moreover, before investing in any particular company, always do your homework so you know what you’re getting into.

Think about your goals

When it comes to investing, thinking about your personal goals will help you to decide how risky you want to be with your hard-earned cash. If you have a little spare money and are willing to take a gamble in a bid to get high returns, you may decide to act on an exciting trade signal or market boom. If, however, you are looking to prepare for retirement, you might prefer to make a longer-term investment such as buying bonds or property that could bring high returns down the line. You may even decide not to put all your eggs in one basket, making numerous investments to avoid a complete gain or loss. Your investment plan should reflect your personal circumstances and outlook.

Know your limits

Investing can be addictive, particularly if you get hooked on watching the fluctuating currency on the foreign exchange or are continuously being sent signals from brokers telling you now is the perfect time to act based on the current price of gold. That’s why it’s essential to have a budget. You must know exactly what you want to do with your money before you make a move and stick to the plan to avoid doing something you later regret.

Keep an eye out for investment fees

If you’re an investment novice, choosing a fund manager may be the easiest option. After all they’ll help develop and manage a portfolio on your behalf and help guide you in the right direction with regards to making sensible financial decisions. That said, fund managers almost always charge more fees than an account you manage yourself and this will, of course, eat into any profits you may make. Similarly, if you’re buying individual entities such as stocks, you may be charged per order, so keep a look out for sneaky fees and try to keep your outgoings down.

Consider exchange-traded funds

The markets change at such a rapid rate that, unless you have copious amounts of free time to analyse what’s happening in the business and financial world second by second, it’s probably best to consider exchange-traded funds (which follow a wide range of stock, or sometimes then entire market). As a rule, this type of investment tends to be less volatile than individual stocks as they tend to grow over the years and reduce the risk of you losing out should a singular company crash and burn.

Investing may seem like a brave new world if you’ve never done it before, but with plenty of research and guidance it can be productive – just take it slowly and don’t make any moves without having all the facts to hand.

3 Ways To Become A More Disciplined Investor

It’s fairly indisputable that discipline is one of the most vital attributes for a person looking to establish financial security. But it’s also particularly important for those who are looking to invest their money, whether in stocks, commodities, or some other venture. A reckless or carefree approach can get you lucky now and then, but will ultimately prove unreliable or at least unsustainable. On the other hand, a more practiced, careful, and strategic approach to investing can result in a stable long-term outlook and steady growth of funds.

Some of this depends on personality and experience, but here we’ll look at three tips anyone can follow for how to become a disciplined financial investor.

1. Divide Your Expectations Into “Buckets”

If you haven’t heard of the “bucket approach” before, you may want to learn a little bit about it before reshuffling your financial strategies. Basically, this is the approach of dividing your money into buckets for specific goals. For instance, if you want to buy a car, you’ll have a set venture dedicated to your car fund; the same might go for a home, an engagement ring, tuition, or even something a little smaller like a vacation. The point of doing this is to gain a more comprehensive understanding of what money you need for which purposes, and when you need it. You can then plan investments accordingly, and if necessary break up your strategies from one “bucket” to another, allocating risk as seems appropriate.

2. Keep A Trading Journal

If that sounds like it might be a technical term, don’t worry, because it’s not. There’s no exact format or method for a trading journal, but it’s been described as a comprehensive record of data related to a trader’s performance over time. Basically, that means it’s a detailed set of notes on everything that’s gone into your trades. Ideally, it’s not just what the asset was and whether it was a gain or loss, but also what the conditions were upon entry and exit, why you invested, why you pulled out, etc. It can be as thorough or simple as you like, but the underlying point is that past performance can help you to learn a great deal about your own habits, and what your best conditions for success have been. The best traders are unemotional but still introspective!

3. Eliminate Your Emotions

We just mentioned that the best traders are unemotional, but this bears further attention in its own category. Simply put, it’s been expressed by innumerable experts and publications that reacting emotionally can lead to poor decisions at the worst times. You might panic and pull out of a perfectly stable investment simply because of a downturn, or you might get excited and pump more money into a rising asset that isn’t poised for long-term success. Those are very basic examples, but they illustrate the larger point that too much happiness, excitement, sadness, or worry with regard to investments can lead you to make decisions that aren’t based on logic and knowledge. Of course you’re going to be thrilled when your investments are making money and frustrated when they’re not—just don’t let these or any other “feelings” dictate your actions.

What Stock Should I Buy?

Warren Buffett once said, “it is not necessary to do extraordinary things to get extraordinary results.” When it comes to finding stocks worth investing in, we simply need to ask the right questions.

We share 3 of these questions with you, and 3 financial ratios that can help answer your questions.

What if you don’t have a stock in mind? After all, there are over 9,000 stocks on the Singapore Exchange (SGX), New York Stock Exchange (NYSE), NASDAQ and Hong Kong Stock Exchange (HKex) alone and brokers like us offer access to many more markets including Thailand, China, Indonesia, Malaysia and the Philippines.

There are tools out there that can help you identify stocks using ratios like the ones above. Click here to learn how stock screeners can help you identify trading opportunities.

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