The other day, in a general conversation, the subject of investment crops up with a friend.
It went from the need to invest our hard earned money before it reduced to merely a token sum on our retirement. There are needs for our material and future expenses.
The ranting went on to unit trust and said that he had just invested in a unit trust that its main portfolio is in oil palm stocks and it is good.
I don’t doubt that, oil palm industry definitely has a very bright future, if you have gone through the literature on this subject and the future demand on its product, nothing can go wrong.
What I don’t quite agree is investing through unit trust.
People put allot of faith on fund managers and consider them experts that can make no mistake. Things can go terribly wrong, in fact more than half of the responsibility lies with the investor. He must know the type of funds that he is getting into and the portfolio of the fund, meaning you must know the stocks that the unit trust is involved, generally going through the stocks on their financial results and knowing them. This can be very tedious.
You also need to have substantial knowledge of your country’s economy and its relation to the world. You don’t want to be caught when the unit trust had peaked and on its decline.
Trust fund managements make a living out of investors, a portion goes to their fees before there are profit left for distribution, if any, otherwise reduce the ‘net tangible value’ and give you a token portion just to keep you happy.
What I really don’t like about them is, most of them do not have the foresight. Take the Oil palm industry for instant, they should have been in it 3 years ago when there were concerns for mineral oil.
I was call up by my bank to invest in their 'Greater China' trust fund some time last year, no doubt it may still have potential, but the early birds had already flown, including Warren Buffett.
So, what you know is what you will get, don’t put too much trust on people for your future.