Below are answers that I gathered from answers.yahoo.com:
From what i get from this blog (http://best-financial-advice.blogspot.co… invest in fixed deposit in bank offers security, but it comes with a low rate of interest. If invest in stock market, we have great potential for getting high return, but it comes with high risk. If invest in unit trust, it has relatively low risk and reasonable rate of return. So, is unit trust really a good way to invest our money?
It’s a way of investing in the stock market without the ‘direct’ risk. Unit trusts invest in alot of different shares, so the risk is reduced because if one lot of shares go down, they have others to make up the loss. It is still a riskier investment than deposits and you can still lose money. It all depends on how much risk you are prepared to take wih your money. Unit trusts should be viewed as a medium to long term investment (5 years minimum, preferrably more) so don’t put in all your money, or any that you will be needing in a short time. Over a reasonable period of time, unit trusts generally outperform deposits, but there are no guarantees!
26 years in the financial services Industry
Its a managed fund, which means that there is a ‘professional’ managing how the funds are invested. An advantage of unit trusts is that because of the larger amount of (pooled) money, the greater the opportunities to compile a diverse and balanced portfolio. Make sure the fund is invested :
a) in a balanced way (not putting all you eggs in one basket, this will prob. be a mixture of ixed interest, shares, bonds, maybe some cash investments) and
b) has diversity (in case one egg goes rotten, it doesn’t mean the others/ or the investment in total will be ruined!)
c) check the conditions for entering and exiting the fund: fees etc. and what happens if someone pulls out (do the other investors have to cover that share / do the remaining investors recieve the benefits remaining after the original contribution is returned to the leaving party etc.
Check the funds’ Investment strategy and make sure that you can see a balanced (usually in a pie graph is easiest) approach. Its’ always worthwhile to check the funds’ ethical policies to make sure you are not investing in companies that exploit child-workers or are responsible for environmental damage.
Check the qualifications of the fund manager and ask for look at their management history – how have the investments the manager have chosen performed for the clients etc. have they ever been bankrupt/had to liquidate.
I like to think of my investment money as though it were if I were sending my child to a new school – you don’t want your child to be stuck somewhere they hate, or if there is poor performance standards etc.
me! (this is only general advice, please make sure you see an impartial/independent professional before you actually invest your hard earned money.