How to buy and sell


In the previous pages we explained how unit trusts unlock the opportunities offered by the Johannesburg Stock Exchange to ensure that everyone can share in the profits generated by the South African economy. In this section we look at the ease with which investors can buy and sell units in unit trusts.

You can buy units in a fund from a unit trust management company. The price of each unit is calculated at the end of each day and most newspapers publish this information. The papers list two different prices. Firstly, there is the unit trust buyer's price, which is the price at which one buys units from a unit trust company. The second price is the unit trust seller's price, which is the price at which you can sell units back to the unit trust company.

To buy units is as easy as opening a bank account. On any weekday during office hours, a wide choice of unit trusts is available to you. Investing a lump sum, a cheque or cash sent along with an application form to your chosen unit trust company will ensure you your own registration number. In the case of regular monthly investments a debit order form, along with the application form, will be all you need to complete to finalize your purchase of units.

Costs

When you invest in unit trusts an initial charge is payable, usually 5% of the amount invested. This charge decreases as the size of the investment increases.

A service charge of 0,75% per annum is levied. The calculation takes place on the average month-end value of the fund. In addition, a small compulsory charge covering MST and brokerage fees is payable.

With every investment you make, a letter will be mailed to you to show the amount invested, the number of units bought and the unit price. The portfolio manager and other investment experts address investors on relevant issues through the various publications.

At the end of every financial year the investor receives an annual report showing the performance of the unit trusts.

To sell your units is just as easy as buying. Simply send a written instruction (called a repurchase instruction), accompanied by your unit trust certificates, to any authorized marketer or to the unit trust company. As soon as they receive the written instruction, the company will buy back your units at the ruling price. They will make out and mail your cheque immediately.

Don't be left out in the cold, harsh world of inflation, rising costs and tax. Let unit trusts take care of these ever-present dangers while giving you the best opportunity to share in the wealth creation of the economy! By investing on a regular monthly basis, investors are able to take advantage of rand cost averaging, thus ensuring more units for less money.

The questions every potential investor should ask himself are:

  • Am I prepared to invest my money for a minimum term of about five years?
  • Do I have adequate life assurance?
  • Do I have a savings account?

If you have answered "yes" to all of these questions, unit trusts are probably right for you.

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