> Six steps to debt freedom

> Brighten their future

> Gold fever: here to stay?

> Nedbank goes green

> Evaluating performance

> Gold hits 18-month high

> Pay less estate duty

> Why lending will resume

> Positive platinum demand

> Breaking the habit

Today, 10 February 2010

Yesterday, 09 February 2010

› Strike three, Mr President

› Cooked head discovered

› Zuma apology 'unwelcome'

› 'Illegal' traps blasted

› Madiba to grace Parliament

Keeping track of your investments is an essential aspect of a financial plan, but over the past decade it’s become more of a struggle to gain information on key issues such as performance and costs.

Unlike some other investments, unit trusts have a good track record in this regard. Costs have to be disclosed in marketing material and price information is readily available.

Full disclosure on costs
As an investor, you must be informed of all costs involved before you buy your unit trusts. Once you have invested, the asset management company must disclose how much of your money was taken off in fees, how much was applied to units and at what price the units were purchased.

The company will then communicate with investors every time there is a movement on the clients’ accounts. At the very least, this will happen whenever there is an income distribution. This could be anything from annually, in the case of a few funds, to six-monthly, the norm for equity funds, or even monthly in the case of money market funds.

They will also inform you on an annual basis, about the state of the company that you have chosen to invest through and the individual funds you are invested in by means of an abbreviated annual statement.

Investors are also entitled to the full annual report from each company, as well as a detailed portfolio analysis of their unit trust holdings at the end of each quarter. A number of industry codes and standards of practice govern performance and fee disclosure, ensuring extra protection for the investor.

Liquidity
Another important aspect to bear in mind is that unit trusts are highly liquid — giving you extra peace of mind in the event of a financial crisis.

Most management companies will allow you to withdraw your investment within days and the capital will be transferred to your bank account. Each fund's trust deed makes provision for investors to be paid within 14 days, but most companies pay out well before that deadline. Normally the funds are paid out within two to three working days in the case of equity funds or around 24 hours in money market funds.

While it is easy to withdraw your money, investors should ensure that this only happens in a real emergency. Unit trusts and equity funds in particular are medium- to long-term investments and need time to grow. If you want to invest over the short term, rather choose a money market fund.