Way To Invest In Unit Trusts

Lump Sum Purchases

This is where an investor has a lump sum of monies to invest into a unit trust. This may be the only investment the investor wishes to make. Over a period of time (3-20 years), the initial investment will increase as distribution and other income is earned by the fund. When redemption or sale of the units take place, the unit-selling price will reflect the accumulation and compounding of capital over the relevant periods. It is this compounding effect over time which makes accumulation type investments, such as unit trusts, so attractive to the investor.

For example, someone who has recently inherited a sum of money may wish to invest the funds into a unit trust and hold it for an extended period to save for some specific purpose. e.g. children's education. At the end of the holding period, the proceeds of the sale of the units will be the initial investment plus the returns on that amount, accumulated over the period.

Regular Savings

Some people invest in unit trusts by making regular (e.g. monthly) contributions to their fund. This is an ideal, disciplined and useful way to accumulate capital for a future need. By making regular contributions over a period of time, the sum accumulated at the end of the period will increase. This is commonly known as dollar cost averaging.

At the end of the period, the redemption (or sale) price of the units held will represent the accumulation of all contributions, plus returns generated from the total contributions since the first purchase was made. The effect is more noticeable the longer the holding and contribution period. This form of savings is the basis of most pension fund accumulation e.g. the Employees Provident Fund.

EPF Savings

In addition to investing in unit trust by cash or through a regular savings plan, you can also invest using EPF Members’ Investment Scheme. The EPF will process a request to transfer an amount from a member’s Account 1 to approved unit trusts funds if :-

The Account 1 balance is not less than the required basic savings, details of which are enclosed in the table 1 as prescribed by the EPF for respective age of the EPF members.

Table 1 - Basic Savings Amount in Account 1

Age (Year)	Basic Savings (RM)	Age (Year)	Basic Savings (RM)	Age (Year)	Basic Savings (RM)	Age (Year)	Basic Savings (RM)
18	1,000	28	14,000	38	37,000	48	78,000
19	2,000	29	16,000	39	41,000	49	84,000
20	3,000	30	18,000	40	44,000	50	90,000
21	4,000	31	20,000	41	48,000	51	96,000
22	5,000	32	22,000	42	51,000	52	102,000
23	7,000	33	24,000	43	55,000	53	109,000
24	8,000	34	26,000	44	59,000	54	116,000
25	9,000	35	29,000	45	64,000	55	120,000
26	11,000	36	32,000	46	68,000
27	12,000	37	34,000	47	73,000

The member is less than 55 years old

An account in the approved Unit Trust Scheme has been opened into which the transfer can be processed

No transfer has been made in the previous three (3) months from the EPF Members’ Investment Scheme

Transfers under the EPF Scheme is made at an intervals of three (3) months from the date of the last transfer, subject to the availability of the required balance in Account 1.

The amount eligible for transfer is not less than RM1,000

The amount to be transferred is not more than 20% of the Account 1 balance remaining after deducting the required amount of basic savings prescribed by the EPF (subject to minimum of RM1,000)

Borrowing

Although an investor may obtain a loan from a financial institution for the purpose of investing in unit trust funds, investors should seek appropriate advice as there are additional risks involved when using borrowings to finance an investment in unit trust funds. Investors must bear in mind that interests on borrowings can reduce the potential returns of their investments.

Article from I Create Wealth