Saturday, January 5, 2008

Why Do I Have To Spend All That Time Reading A Prospectus?

Before investing in any unit trust, read the prospectus. It's required that you get one, so if it's not offered, ask for it!

A prospectus is your protection contract. It tells you all you need to know about the fund. If you plan to own the fund, you will want to know how your money will be invested.

The prospectus is a blueprint of the fund. It tells what the fund managers can and cannot do with your money. It describes risk and limits, and the amount of risk the fund is allowed to take. It tells you whether the purpose of the fund is to make profit as quickly as possible or to make only reasonable gains while first bringing in income and protecting your principal.

Many investors who are in a hurry to reach their goal, take the shortcut of not reading the prospectus. This could jeopardise your investing decisions. Read the prospectus. Arm yourself with sufficient information to make an 'informed decision'. It prepares you for what lies ahead.