Wednesday, February 13, 2008

Methods of Investing in Unit Trust Scheme – Reinvestment of Income

By reinvesting distributions from Unit Trust Scheme, some Unit Trust Management Company allowed investors to direct them to use the distribution payable to a unit holder to buy more units in Unit Trust Scheme for unit holder, an investor can equire, on a regular basis, small numbers of additional units that, over time, can add significantly to total returns from investing in Unit Trust Scheme.

Often small amounts of distributions from investing in Unit Trust Scheme are dissipated rather than saved by investors. Reinvestment of distributions is therefore a simple and easy way to increase an investment in Unit Trust Scheme.

Where a unit holder instructs Unit Trust Management Company to reinvest distributions, the amount of the distribution is used to purchase additional units (usually at the selling price quoted on month after ex-distribution date). Some Unit Trust Management Company automatically reinvests distribution; others provide additional unit through a unit-split. Either way the beneficial effect of compounding investment returns is the same.