After posting about how to invest unit trust directly online, there is a reader who had already taken the first step to register an account with Fundsupermart.

I received his email asking for advice:

Hi KC,

I hope you find yourself in a good health today.
I am attracted to one of your post regarding opening Fundsupermart account.
So i have signup the personal account and now is waiting for the password to be sent.
They have call me for verification.
Since i am still new with unit trust, and am just starting to invest in it, i would consider myself a moderate risk investor.

Based on the FSM fund recommendation fund, i am quite interested to invest in OSK-UOB growth and income focus trust. I believe that small to medium companies in Malaysia has big potential for growth since the economy now is stabilizing.
Beside that that, the minimum required investment using cash is only Rm200 and additional investment is also RM200, which is i think affordable to me.

What do you think of my choice?
Do you think that this fund has potential for investment?
I really hope you can give me some tips and advice on how to select a fund based on our financial situation.

Lastly, hope you will be the best in what you do.
I hope you can advice and help in my financial situation.

Thank you and regards,

When it comes to investment, it is more important to have the proper mindset rather than the external factor of choosing which fund that’s more likely to perform above average.

When we invest in unit trust, the main function is to leave the stock-picking process to the professional fund managers. Since they are paid for doing exactly that full time, we do expect that they are going to give their best. Those are not within our control.

Then if we look from our own prospective, we invest in unit trust because

  • we want peace of mind
  • we want to invest passively without much hassle
  • we want better return that hopefully will expedite the realization of our financial goals.

So the basic strategy that hardly goes wrong is:

  1. construct a portfolio of fund which suits our needs and risk tolerance. The portfolio can be a combination of 3-5 funds, but not too many because it is against our purpose of “invest passively without much hassle”. When too many funds are involved, the process get more complicated to manage.
  2. do fixed and regular investment. This is about applying the dollar cost averaging strategy. You will definitely win in the long run.
  3. re-balancing whenever needed. When your portfolio is too much out of balance, do some switching to lock gain and buy low. The easier way is to do this every three quarter or twice a year, or simply when there are major movements on the market.

When you have the right mindset and apply the above strategy, and choose the funds within the recommendation of FSM, you will be doing fine.

Happy investing!


KCLau
KCLau

Personal finance author and trainer

    10 replies to "How to choose which unit trust fund to invest?[Q&A]"

    • […] Susan keeps on learning more about other various types of funds, which are categorized by whether they are domestic (Malaysia), regional, or international. These […]

    • Jeff

      Agreed, John.
      I recalled having invested in Public Savings Fund when the price was at its peak back in 1995. From 2001 onwards, I began to reap the benefits of a decent return of 8% to 15% per annum, not to mention that I’m already making a paper profit should I decide to cash out now. Hence, the dollar cost avering method here works great! If I decide to hold on till I reach 55 years old, this could well turn out to be my 2nd retirement fund after EPF.

    • John

      Hi Leong, I think you start investing when the market and price is at peak. Dollar cost average works in the long run, you probably need to have some patience, unit trust investment is not for short term.

      Give yourself 3-5 years investment horizon and see the results. I am sure you also buy when the price dropped to about RM0.11 through dollar cost averaging. I believe you will lose more if you not doing dollar cost averaging.

    • Leong

      hi , is about 1 yr. The initial unit price that i have is about RM 0.32. I start dollar cost averaging last yr. the unit price drop drastically to rm0.24. Therefore, i am confuse whether i should continue or move to next fund….since the unit price average is about rm0.18 for few months…..

    • John

      Leong, may I know how long you have been doing dollar cost averaging?

    • leong

      good advice ….but..
      For my case, i have invest in public china select fund with dollar cost averaging…but until now the fund have not break even should i continue the dollar cost averaging or should i switching or start dollar cost averaging with other fund such Public Islamic Asia Dividend fund?

    • John

      Good advice. Agree that dollar cost averaging method will work in the medium to long term. It is a way of forced savings too.

    • masz

      Wow, the terms confusing me. But I will slowly look at it and learn. Thank you for sharing, I have learn a lot. 🙂

    • kampunginvestor

      If you want to invest in Mutual Funds, trust me… the best method is the Dollar Cost Averaging method. You won’t loose in the long run but all to gain for.. just my 2 cents! 🙂

    • mtsen

      nice pick, good feedback 🙂

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