Belinda Beresford
Unit trusts are the cloned computers of the financing world – they’re everywhere, they offer opportunities to people who would not be able to make a pedigree investment and they can prove an expensive mistake.
One advantage of unit trusts is you can spread investment over time by buying monthly. This gives you “rand cost averaging”, or averaging out the purchasing power of your investment.
When times are hard and units are cheap your debit order will buy more than when prices are up overall. Monthly purchases allow you to smooth out the purchasing price volatility, taking away the need to time your investment.
Using a debit order to make monthly investments means you can save automatically, almost without being aware of it. You can also save small amounts. For example, FNB has just launched its range of unit trusts where monthly investments start at R100 a month. You can make even smaller investments – Southern Life, for example, allows R25 a month.