Maintained by a Fund Manager, a Unit Trust typically allows you to invest in around 100 stocks and shares. Unit Trusts provide many other tax friendly benefits to investors.
Whilst investing in stocks (often referred to as Shares) has the potential to deliver higher returns than other investments such as bonds, there is significantly more risk involved. This risk is magnified when you have a large percentage of your investments tied up in a single stock. Investing in shares may be more suited to someone willing to accept medium or higher risk.
Simply put, a bond is a loan to a government or corporation. When you invest in a bond, you are lending money to the organisation that issued it. In return for the investment, the issuer delivers an agreed level of income in the form of a rate of interest. At an agreed date, the government or corporation will return the face value (the original issue price) of the bond, known as the maturity value.
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