016 How to choose a unit trust (Mutual Fund)

Lisa Linfield takes us through the steps to choosing the right unit trust (Mutual Fund) in which to invest.   She takes us through the 7 steps to choosing a fund

The 7 steps to choosing a fund

  1. Understand your financial risk profile
  2. Match your personal risk profile to the fund
    • Often the fund has the risk profile in the name – but look closer
    • If you are not experienced, buy a fund that has a mix of assets in it.  It’s like buying a ready made meal rather than the ingredients separately
  3. Look at the tables that rank performance for that type of fund (e.g. look at the table that compares balanced funds)
    • Choose the top 3-5 performers over a 5 year period, the fund performs in the top 25% throughout that period.
  4. Take those top 3-5 funds and go and download their fund fact sheet
  5. Look at risk
    • We’re aiming to get the highest return for the lowest risk
    • Look at volatility – how much the share goes up and down all the time.  The less volatile the better
    • Or look at Drawdown – how much the share drops below the last months value – and for how long does it keep losing money
  6. Which of your 3-5 funds have lower fees.  Phone the call center and ask them ALL the fees you’re paying
  7. The fund manager – have they managed through both a growth cycle and a recession?  Is their investment philosophy the same?

Ensuring success

  • Make sure that you keep watching your statements.  Don’t check too frequently, but every quarter, make sure there is movement
  • Spend some time each week teaching yourself about your investments

Subscribe to our podcast on iTunes

Please do subscribe to our podcast on iTunes, and leave a rating and review.  This helps the podcast to rank higher and therefore makes it more visible to others browsing podcasts in the hope they too may benefit from our content.

Download this episode

Right click on the link here and click ‘save as’ to download this episode to your computer

Sign up for our free investment risk analysis

Feel free to share this article:
share
GOOGLE
http://workingwomenswealth.com/016-how-to-choose-a-unit-trust-mutual-fund/
share
PINTEREST

Leave Comment