Are UITFs good investments?

Posted by Fitz Villafuerte under Investing on May 17, 2016

I’m ready to invest. I have my emergency fund and a life insurance policy. Now, it’s time to invest and I know there are many investment options. I am particularly leaning toward UITFs. I’m a beginner, so are UITFs a good investment?

Answer:

Are UITF investments good or bad? Well, there’s no one best answer to that. It depends on who you are as an individual and your personal circumstances. Invest in UITFs if:

1. You’d like to invest without doing heavy lifting, unlike stocks wherein you pick which stocks to buy. If you invest in an equity-based (simply stocks) UITF, the fund managers of the bank will pick which stocks to include in your UITF.

2. You’re in it for the long-term. Invest in UITFs and hold them (while adding more money regularly). If you want to trade, then UITFs are not for you.

3. You’re busy with work or want to spend your free time relaxing or participating in your hobbies. UITFs are a good investment option if you don’t have the time to put into it. But it’s best to know what UITFs are, how they work and earn you money, and the fees you’ll have to pay.

Finally, you must also ascertain your investment objective, time frame and risk tolerance. UITFs are not short-term investment vehicles. If the purpose of your investment is short-term in nature, say less than three years, then it is not a good investment for you because UITFs are market-to-market investments. The value of a UITF will depend on the performance of the market it is invested in. With the above in mind, you can make wiser decisions when it comes to picking your investments.




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