As we know, it is a form of unit trust investments, as other investment instruments. This means, we have several options in determining the appropriate investment instruments with the objective of our investment and risk profile. Therefore, we need to make a comparison before we make a decision.
This is the comparison between unit trust and others type of investment
Unit Trust vs Stock Market
Unit trust investment is better than investing directly in the stock market in two things, namely the necessary capital and investment risks. You do not need large capital to invest in unit trusts. Investment risk can be reduced through diversification of investments, not as an investment in a blue chip only.
Unit Trusts vs Insurance / Investment-linked Takaful (Investment-Link)
Unit investment trust has an advantage on the insurance / takaful investment-linked, ie in terms of capital liquidity. Typically, the penalty will be imposed on you if you want to cancel your coverage policy when you change your investment objectives (such as a sudden want to use the money), and the penalty imposed was different rate. You should be aware that you can not have both simultaneously; high returns and high protection. In the insurance / takaful investment-linked, it is inversely proportional; high-yield, low coverage, and vice versa. It is better if you can separate the investment from the cover and make the two things separately. Both are equally important in their own context.
Unit Trusts vs Investment
Foreign investment means investing abroad. Of course, many weaknesses if you invest abroad. You will be exposed to changes in the national policy, exchange rate risk and other risks. It also requires a large capital.
Unit Trust vs Cash / Fixed Deposit
Unit investment trusts have advantages in terms of potential returns and liquidity of capital. Although the risk of fixed deposits and savings account / savings, such as Tabung Haji, wadiah and so is very low, the potential returns are also very low. Therefore, it is vulnerable to the effects of inflation can diminish the value of savings. Who says saving money in the bank has no risk? The Bank also covered by insurance, because the bank has an enormous potential for loot!
Unit Trust vs Real Estate Investment
Property investment is a good investment, but you may find it difficult to liquidate assets in a short period. It also requires a large capital. Barring the property if you inherit a lot. It is an issue that is not the same.
Unit Trust vs Derivative Financial Products
Derivatives are financial products that derive their values from higher commodity prices or a more basic instruments. For example, the value of crude palm oil futures is obtained from crude palm oil prices. Normal derivative products is the “futures” and “options”. Investment risk is very high compared with unit trust investment. If you are not familiar with derivatives investments, it is better if you do not invest in it.