254) How to Increase the No of Unit Trust Units Easily?

This is an interesting question that will always excite Unit Trusts Consultants and Investors.

There are few ways as listed here, from the most difficult to the easiest..

1) Invest more money

Basically means you buy more units and accumulate more. The more you invest, the more units you get.

2) Reinvest the Distribution

When the fund declared distribution, do not pay out to your bank account.Inform the Unit Trust Management Company to buy more units using the distribution amount.You can set it to be Auto-Reinvest for you to accumulate more units.

3) Invest into Funds with lower Unit Price

Number of units = Investment Amount / Unit Price

For example:

Assume Service charges are calculated separately.

Fund A is RM0.80 per unit.

When you invest RM1,000, you will get 1000/0.80 = 1250 units.

Fund B is RM0.25 per unit.

When you invest RM1,000, you will get 1000/0.25 = 4000 units.

Investing into cheaper units will give you more units.

4) Switching

Using the same formula above, you will get more units when you SWITCH from a higher unit price into a lower unit price funds.

Using thee same example above.

Assume Service charges are calculated separately.

When you buy into Fund A, you get only 1250 units.

When you switch to Fund B, you get 4000 units.

An immediate increase of 4000 - 1250 = 2750 more units.

This example is also to show you that Number of Units does not tell the full story.

The full formula is:

Asset Value = No of Units x Unit Price

Units Accumulation is only half of the wealth story.

For an example outside of unit trust, we can use cars.

Do you prefer 1 car or 10 cars?

You definitely will ask which car types.

You will take 1 car if the car is a Lamborghini Huracan as compared to 10 Perodua Kancils.

(I apologize to Perodua Kancil and their owners)

Lamborghini Huracan

Perodua Kancil

Now you know why Quantity alone is only half of the equation.

https://highlevelrules.blogspot.my/2017/11/dividend-vs-distribution.html

Thursday, July 2, 2020

254) How to Increase Your Unit Trust Units Easily?