Investing Basics: The Fat-Free Guide to Unit Investment Trust Funds and Mutual Funds
   Updated: 2022-03-22T01:30:00Z
    minute read


If we talk about investing, it is almost always that the Stock Market is the number one pick when it comes to making money (if done correctly). The cryptocurrency industry is also not that far behind.


Investing Basics: The Fat-Free Guide to Unit Investment Trust Funds and Mutual Funds
"money-coin-investment-business" by nattanan23 is licensed under CC0



    However, these industries require you to do your research before making an investment decision. This is especially true if you are trading instead of investing.


    Given your life's circumstances, you might not be able to do this diligently. This can lead to bad choices that will make you lose money in the end.


    So how can you have peace of mind?


    The solution is to invest in Unit Investment Trust Funds or Mutual Funds.



    Unit Investment Trust Funds vs Mutual Funds


    Investing Basics: The Fat-Free Guide to Unit Investment Trust Funds and Mutual Funds
    Investing Basics: The Fat-Free Guide to Unit Investment Trust Funds and Mutual Funds



    Are Unit Investment Trust Funds and Mutual Funds for You?


    If you are a busy bee and have no time to study the nitty-gritty parts of directly investing in the Stock Market.


    It doesn't mean that you don't need a little bit of research to determine a suitable investment to enter. You need to determine first your own investment risk profile.



    Choose the Appropriate Types of Mutual Funds or UITFs Based on Your Risk Profile


    4 Types:


    • Money Market Funds (Low risk)
    • Bond Funds (Low risk)
    • Balance Funds (Medium risk)
    • Equity or Stock Funds (High risk)



    What Is the Ideal Investment Horizon of UITFs and MFs?


    Before investing, you must settle your heart and mind on these investment time frames:


    • Medium Term Investment Horizon: between 3 to 10 years
    • Long Term Investment Horizon: More than 10 years


    You should regularly invest in your Mutual or Unit Investment Funds and let them sit for at least 3 years to accumulate gains. However, based on experience, 5 years is the most ideal minimum waiting time to at least harness the power of compounding interest.



    What Is the Risk in Investing in MFs or UITFs


    Any investment carries its own risk so tread carefully.


    • As you increase your investment risk profile, you are increasing the possibility of a bigger profit. At the same time, the losses.
    • Although the minimum capital needed to buy a fund is low, the fees when redeeming/selling the fund are a bit high compared to when you are directly investing/trading in the stock market.


    To not destroy your finances (and your life) when an investment goes south, make sure that the money you intend to invest, is the money you are willing to lose.




    Closing Thoughts


    Both UITF and MF work the same way. The only technical difference is the platform offering the fund.


    If you are torn between two (lovers) funds, then I suggest choosing based on the physical location of the fund establishment. Having close proximity to the establishment makes it easy to process any transactions.


    But if your investment budget allows it, why not have both? In the world of investments, the more, the better.




    What you should do today


    Do you have a Mutual Fund or Unit Investment Trust Fund investment? Which investment is the better one? Share your perspective by commenting below.


    If you like my content, please subscribe to this blog to grow our community. You can also connect with me through these accounts:



    Also, consider sharing this article on your social media platforms. Sharing this will help your friends/followers who are looking for this content as well.






    "If you have the stomach for stocks, but neither the time nor the inclination to do the homework, invest in equity mutual funds."
    - Peter Lynch
    - The Introvert's Perspective by ÆlfRæd (ElfCounsel)
    back to top