Navigating the investment universe can be stressful and overwhelming. As such, many Basotho shy away from investing because they do not know where to start, cannot make sense of the financial jargons and are afraid of making mistakes. A convenient option to consider is to invest via collective investment schemes, popularly known as unit trusts.
What are collective investment schemes (unit trusts)?
Collective investment schemes (CIS), also called unit trusts, are convenient and low-cost investment vehicles that help investors access the investment universe. Unit trusts pool different investors’ monies and invests in the market with a promise to give investors good returns. Each investor will have a portion of the investment pool called a ‘unit’.
Where do you find unit trusts?
Unit trusts are offered by asset management companies that are licensed and regulated by the Central Bank of Lesotho (CBL) under the Collective Investment Scheme Regulations of 2018. An asset manager is responsible for the management of investment assets, manages risk, ensures good returns to meet investors’ expectations and provides professional financial advice. Lesotho currently has three licensed and registered asset management companies.
What should you consider?
As mentioned in the article ‘Investment Planning Considerations’ available on the available on the Reporter website, investors need to consider many factors for example the investment goal, risk tolerance, time and expected returns. There are different types of unit trusts to choose from depending on your investment goal. Asset managers offer unit trust funds such as money market fund, fixed income, balanced funds and equity funds among many. To choose a suitable fund, please seek professional advice.
What are the benefits of unit trusts?
Unit trusts are low-cost investment vehicles that allow investors to start their portfolios from LSL5 000. Depending on the asset manager, investors can set up debit orders from LSL1 000 to grow and build their portfolio with the flexibility to pause or increase contributions. Unit trusts are also safe investment vehicles because asset management companies are regulated. The funds are also managed by highly skilled and experienced fund managers whose performance is measured against set industry benchmarks.
What do you need to start?
To start investing via unit trusts, as previously mentioned I encourage you to first seek professional advice. This will help you identify your investment goals and map out an investment plan. To open an investment account, you will be required to provide documentations such as proof of residence, source of income and proof of residence. Lastly, do not procrastinate! Visit your preferred asset management company and start investing today.
‘Never depend on a single income. Make an investment to create a second source’ – Warren Buffett.
