Finding Value

The concept of valuing a unit trust fund is fundamentally different from valuing a company.  One fundamental difference is that the prevaling market price of shares are based upon the demand and supply of the shares whereas for unit trust fund, the demand (new investments) or redemption (withdrawal) does not affect the Net Asset Value (NAV) of the unit trust fund.  The NAV is valued based on the value of the underlying net assets adjusted for accrued management and trustee fee, the underlying assets being value of the companies held in the unit trust portfolio.

Thus whether a particular fund represent good value is based on the shares held in the portfolio.  It is the primary function  of the Fund Managers/Investment Managers to undertake necessary analysis and manage the portfolio by including stocks that will appreciate in value in accordance with the  funds investment objective.  Remember, the value of the unit trust will appreciate or depreciate based on the market value of the underlying shares on a daily basis. 

Investing With Consistent Amount

Dollar cost averaging represents a good tool over the long term, which enables the elimination of emotions out of investment decision making.  It is a technique designed to reduce market risk through the systematic purchase of unit trust at predetermined intervals and set amounts.   The time at which you will make these investments is up to you, though it is recommended to make it when you receive your salary or once per month. With dollar cost averaging you purchase more units when the prices are low and few units if the prices are higher.

Some basics to apply before investing

1. Identify your risk tolerance.
2. Read and understand all relevant information with regards to the investment.  Get your information from reliable sources.
3. Have a cash buffer of six to nine months expenses for emergencies before you start any investment.  Investing is a medium and long term programme.
4.  Maximise your risk by diversifying your investments.
5. Regularly review your investments to ensure they stay on target and relevent to your financial goals.