...perception out there, right. A lot of people out there, they've also been asking...that, uh -
Is Unit Trust - is it a GOOD form of investment? How do you even answer that?
Wow. Uh. I mean its important to notice that from the previous two questions already
that a Unit Trust isn't technically an investment in itself.
It's really very much a structure of which you can invest
so the difference obviously is that
It would be very hard to say whether a unit trust is a good investment because we just described a couple of different types of unit trusts
And so it's very hard to tell
Whether it's good or not depending on what KIND of Unit Trust it is, so that's one. and so in that sense
You have to constitute what is 'good', you know?
Because what is good, to let's say - a 62 year old woman
who needs passive income on a regular basis, is not going to be as useful for a 25 year old once who's trying to make
10, 20 percent annualized returns every year, you know.
Let's look at an example of what 'good' really is like - just to distinguish this difference, or highlight this difference a little better.
In (At) the end of 2002, Apple - as the individual stock
Was priced at about $14.33, and then in 1st February of 2020, which was actually just two months ago
It was about three hundred and ten dollars. So to emphasize this, it increased by over 2,000 plus percent.
And the annualized return on that is somewhere between 18.6 and 19.9 depending on what kind of range you're looking at
you know, so the compounded interest for that as the individual stock is just insane, you know
while if you look at the collective investment scheme system, for example, if you looked at
Index like the S&P 500 which this you can usually invest through ETF
exchange-traded as a form of unit trust you can invest through that unit trust so to speak, and
That same unit trusts with 500 stocks only increased by 7.5 percent
So Apple outperformed that particular unit trust like by almost three times, you know
Which means that if you invested
$100,000 you will have returned three times as much from Apple roughly, you know [correction, calculation at 2.23]
I mean in relation to how much you could have compounded across the last 18 years
so [Apple: $1.924 mil vs SNP500 $342,000]
It's quite hard to define what is 'good', because many people would be quite satisfied with 7.5
until they hear of a case study like Apple where you get
annualized return like 19.
And so if you really want to define what 'good' is
you have to be aware of the risks and returns and see whether 'good' is suitable for your very specific profile because if
You were investing in something that HADN'T been Apple
Then there's a pretty decent chance that you wouldn't even have gotten anywhere close to 7.5%.
While, if you were really good at investing generally, and you really want a 'good' investment like that
Then you would have to learn a much harder degree on how to pick out stuff like Apple. Does that make sense?