unit trusts will make some sort of income distribution during
the year. If you've decided on a unit trust to provide you with
income, then you may have invested in a trust which will provide
regular distributions, perhaps monthly or quarterly.
If you've invested in a trust as a long-term
investment, the Shape of Money recommends that, as with any other
investment, you arrange to have the distributions reinvested to
take advantage of compounding growth.
What else could you consider before investing in an unit trust?
- Can you make additional contributions to
the fund, either by a regular savings programme and/or lump-sum
- Check the size of the fund. If you're comparing
two or three trusts, ask why one fund is bigger than another.
The bigger fund will at least offer greater economies of scale
and may also indicate a fund's popularity.
- Because you're not making the investments
directly, review the investment statement, in order to fully
understand what the fund is to be invested in. You may not be
comfortable, for instance, in a fund invested in an industry
responsible for clearing virgin forests for development.
Information you could read
- In the first instance, read the investment
statement. This will outline the above information (and more)
for that particular trust.
- Other documents you could read include
the prospectus, trust deeds and any other financial statements
relating to the unit trust. These documents are not designed
for selling or marketing, so they may be more difficult to get
hold of and will certainly be more difficult to read and understand.
- Some Rules for a
Safe and Successful Investment
In our savings and investments section there are a number of useful books you could consider buying or borrowing. Most
of these include some information on investing in unit trusts.
Review the media
in our links page and newspapers such as the National