GOLDEN RULES OF INVESTING IN UT’s

Investor’s Investment Objective Eg of investment objectives: retirement, children’s higher education, better returns than FD (currently 3-3.5% p.a) & inflation (currently 7-8% p.a). Investment objective is the 1st Golden Rule becoz it is the most important. Without objective, we do not understand why we are investing & we will be easily swayed astray by market conditions (whether rising or falling), rumours, & other influences. Even with an objective, we have to remind ourselves constantly. Refer to Golden Rule No 5 to quantify.

Objective must be a SMARTER one, ie.

S pecific (eg. MY retirement, my son Jonathan’s university degree in medicine in a UK university)

M easurable (how much in future value do I need, taking into account inflation, exchange rate, etc)

A chievable (taking into account investor’s present needs & means, can he afford it)

R ealistic (within his means of achieving, not out of this world eg. to be a billionaire or trillionaire, ha ha)

T ime-bound (must have a deadline when they need the money-pls see Golden Rule No 2)

E lastic (flexible-see Golden Rule No 6)

R ecorded (written down)


Medium- To Long-Term Investment Time Horizon (MINIMUM 3-5 Years)

NEVER invest money required in the short-term ie. less than 3 years & do NOT expect above average returns in less than 3-5 years.

Invest Regularly/Repeatedly For DCA (dollar-cost-averaging) Never invest ALL your money ALL AT ONCE. & have separate pools for short-term goals & medium-to-long term goals & NEVER invest emergency funds or money needed in the short-term into investments that may go up & down.

Investor’s Risk Profile - Aggressive, Moderate, Conservative Select funds according to the investor’s risk profile: can be a combination of funds if amount is substantial eg. an aggressive investor may choose 3 funds: 2 aggressive funds & 1 moderate fund (the key is asset allocation). Refer to ACE Planners’ Fund Profiles (attached herewith) to shortlist the suitable funds & then refer to fund Prospectus & Quarterly Fund Review for more detailed info to select the fund.

Expected Returns - In % p.a. & RM In line with Golden Rule No 1 (objective), the AMOUNT required to achieve the objective must be quantified (using our FP Worksheets, FPAdvisor or Pocket Calculator). The expected % return p.a. should be realistic. For unit trust investments, an average annual return of 8-12% over the medium- to long-term (Golden Rule No 2) is highly achievable (definitely beats current inflation!).

Review Regularly & Rebalance If/When Objective/Time Horizon/Risk Profile Change During the course of the investment time horizon (Golden Rule No 2), consultant should review the investments with the investor. Suggested frequency is 1-2 times a year. Rebalancing is absolutely necessary when risk profile change therefore reallocation to the appropriate funds of the same risk profile as the investor (Golden Rule No 4). Rebalancing is also absolutely necessary when time horizon reaches less than 3-5 years by which time all or most of the investments should be switched to bond or money market funds