Investing is one of the important vehicles you need to build your wealth.

Investing is more for the mid to long term-that is two years or more.

Exchange-Traded Funds (ETF) and Unit Trusts are two of the products

many people use for investing.

ETFs are open-ended investment funds listed and traded on a stock

exchange. They aim to track, replicate or correspond to the performance

of an underlying index or asset. ETFs provide access to a wide variety

of markets as well as asset classes and similar to trading any stock, you

may buy or sell ETFs through your stock broker or through your own

online trading account. ETFs are actually very similar to Unit Trusts. The

only major difference is that there are no performance fees with ETFs.

Investors therefore pay lower management fees compared to hefty fees

paid to fund managers when buying Unit Trusts.

When you buy a Unit Trust, you need to pay the fund manager a

management fee regardless of whether you are winning money or not.

This fund manager is the one who manages your account and money. As

professionals, we trust that they can make better buy or sell judgments

than us and eventually provide us with sound advice, with the aim of

making more money for us compared to doing the investing ourselves.

If you do not mind the hefty fees and are clueless about the market,

Unit Trusts may be one of the products you want to consider.

Investing my money into ETFs is my preferred choice due to its very low

management fees and other advantage.

Buying ETFs largely depends on the components of the particular ETF

you buy, rather than the skill of a Fund Manager. This is the main reason

why fees for Fund Managers are much lower. On top of that, due to how

ETFs are structured, you can achieve diversification of an index fund

through a single investment.

Do you know according to statistics, close to 70% of ETFs beat Unit

Trusts in terms of returns ? One of the key reasons is due to the very

low management fees involved when buying ETFs, as compared to

high management fees paid to Unit Trusts Fund Managers. Nevertheless,

sales agents still push for Unit Trusts as it offers them higher

commissions as compared to buying ETFs, which is mostly done through

an online platform.

Unit trust vs ETF

The post Stop Buying Unit Trust appeared first on Singapore Stock Analysis | Opening Trading Account | Collin Seow.