Say, you invest $ P in the best unit trust exactly for 1 year. You read that your unit trust profited by A % per annum the same year.
Digest this...
Your profit is A LOT LESS than A%
The Agent
His value to you
The middle+sales person bringing your money into the fund. Most highly paid in terms of sales charge and service. He better be providing damn good service in terms of:
· Solid and honest advice on the best investment option available
· Condition of your money in the fund any given time
He gets X% of your $ P.
The Company
His value to you
Providing you the opportunity to invest in diversification in terms of asset class and industries.
They get Y% of your $ P.
The Managers
His value to you
Make more money for you, ensure you don’t lose money in bad times, and earn above average in good times.
He gets a hidden and RECURRING Z% of your $ P.
Your actual return, B% = A% - (X + Y + Z)%
Now, B% should be
a) more than 0% (duh)
b) more than 3% per year (FD rate)
...or else, forget about redeeming it within a year! You should let is sit and simmer for at least another year or so to do better to at least break even AND cover the upfront costs!
He gets a hidden and RECURRING Z% of your $ P.
Your actual return, B% = A% - (X + Y + Z)%
Now, B% should be
a) more than 0% (duh)
b) more than 3% per year (FD rate)
...or else, forget about redeeming it within a year! You should let is sit and simmer for at least another year or so to do better to at least break even AND cover the upfront costs!
2 ways: 1 become an agent yourself or just invest using cimbclicks..only 2% :P
ReplyDeleteYea, I have tried the first using own EPF :)
ReplyDeleteThe problem with that is you need to keep up with the annual quota, i think is RM30K.
ReplyDeleteHey, you not yet blog about your US investments just as what is highlighted in the Personal Money magazine :P (i bet that make more money than mutual fund :P)
Public Mutual is it? No, mine's actually no quota; it's one of the UTMC available via FundSupermart. I don't really sell, and there are other reasons actually besides doing my own EPF investing.
ReplyDeleteAh, yes, I probably would :) in subsequent posts. Good reminder :D