You know I often avoid the Search/Explore function on Instagram because it has a way of making me feel like my life is boring, dull. Heheh I’m sure people with self esteem find it inspiring.. but anyway, I managed to gather enough strength to explore and I came across Samke Mhlongo’s page. At first I was drawn to it because she travels a lot, looks amazing and take gorgeous pics too but as I scrolled through her page, I got to learn that she is super funny, an MBA Graduate, a Wealth Coach, founder and CEO of TNC Wealth Partners.
She also shares helpful information on her page about wealth creation and finances in general. For example, I loved, loved how she explained what unit trusts are, by making it relatable and funny.
So do check our her page on IG, there’s lots to find, but first.. here is Samke on Unit Trusts:
Dear Samke, What is a unit trust?
A unit trust is an investment option that allows you, to own a little bit of a lot of things. Huh?
Imagine you are hosting a dinner party for 6.
One guest wants a glass red wine (my friend @asandamaku), one guest wants a glass of white wine (my friend @drnandimd), two guests want juice (Don’t have such friends LOL), and 2 guests want a glass of champagne (Me and my fab friend @seth_shezi)
So, if you have a limited budget, it will be difficult to buy full bottles of the required drinks for your dinner party, when you could buy just a glass of many different drinks. Right?
Now, imagine many people had the same desire as you. To have a variety of drinks (diversified portfolio) but didn’t have the money upfront to buy the full bottles (i.e. invest in whole shares)
That’s exactly what unit trusts are. Someone (a fund manager) has put together a mix of drinks (a “mix of shares” is called a Fund, and they are held in a Trust) for people to invest in (buy units) by contributing what they can every month. Each R1 you invest, gets you a fraction (unit) of all the shares included in the fund, held in a trust (hence unit trust)
Why would you want to do this?
Well, investing R1 in 1 share is risky, what if the share price falls? Investing R1 in a unit trust is less risky, because your R1 is split across many shares, thus diversified, thus reducing your risk
See, easy peasy lemon squeezey (now I’m thirsty)