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UNIT TRUST PURCHASING GUIDE

STEP ONE
Determine your goal and amount that you are saving towards. (If you require assistance to
determine future values or what you need to invest to reach your goals move to the goal
calculation worksheet.). Click here to open goal calculation worksheet
Goal (e.g. overseas trip)
Period (years)
Value target at the end of the above period R

STEP TWO: LIFESTYLE ANALYSIS QUESTIONNAIRE

1. When will you need the money that you are planning to invest for your goal?
Within 2 to 3 years 5
4 to 6 years 35
7 to 10 years 40
More than 10 years 50
POINTS

2. Assuming an inflation rate of 9% per year, how do you see your annual income growing
over the next five years?
Will far outpace inflation (new job etc.) 5
Will stay ahead of inflation 3
Will keep pace with inflation 2
Will decrease / not keep pace 50
POINTS

3. How much of your monthly take-home income is used to pay debts other than your
home loan? (e.g. vehicle HP, credit cards)
Less than 10% 8
Between 10% and 25% 6
Between 25% and 50% 3
More than 10% 1
POINTS

4. How many dependants do you need to support?

None 4
1 3
2 to 3 2
More than 3 1
POINTS
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5. Do you have an emergency or reserve savings fund? (This should ideally equal at least two
to three month’s take-home income.)
No provision 2
Yes, but less than one month’s income 6
Yes, I have an adequate reserve 8
POINTS

6. Apart from an emergency fund, do you have separate savings investment plans for future
financial needs such as university education, a deposit on a motor vehicle or a second
home?
Yes, I have separate investment plans 8
I do not expect to have such expenses 6
I intend to withdraw a portion of this money for these 5
expenses (answer question 7 accordingly)
No, I do not have separate investment plans at this time 2
POINTS

7. Do you expect to withdraw more than one third of this money within 10 years?
No, I do not 50
Yes, probably within 3 years 5
Yes, probably in 4 to 6 years 30
Yes, probably in 7 to 10 years 50
POINTS

8. Have you ever invested, or would you invest again, individual gilts or in gilt unit trusts?
(gilts: government or parastatal. stock; e.g. Eskom)
No, and I would be uncomfortable with the risk if I did 1
No, but I would be comfortable with the risk if I did 9
Yes, but I was uncomfortable with the risk 2
Yes, and I felt quite comfortable with the risk 10
POINTS

9. Have you ever invested or would you invest again, in individual shares or equity unit
trusts?
No, and I would be uncomfortable with the risk if I did 1
No, but I would be comfortable with the risk if I did 15
Yes, but I was uncomfortable with the risk 3
Yes, and I felt quite comfortable with the risk 16
POINTS

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10. Which answer below best describes your attitude to investment risk?
I would only select investments with a low degree of risk 2
I prefer a mix of investments with emphasis on those with a 5
lower degree of risk, and a small portion in others that have a
higher degree of risk but also a higher return potential
I prefer a balanced mix of investments - some that have a low 9
degree of risk, others that have higher risk but also higher
return potential
I prefer an aggressive mix of investments - emphasising those 12
that have greater risk and thus higher return potential, along
with some lower risk investments
I would only select investments with a higher degree of risk 16
and thus greater potential for higher returns
POINTS

11. If you were able to improve your return by taking more risk, how far would you go?
Be willing to take a lot more risk with all your money 16
Be willing to take a lot more risk with some of your money 12
Be willing to take a little more risk with all your money 10
Be willing to take more risk with some of your money 5
Be unlikely to take much more risk 2
POINTS

12. What percentage of your total investment portfolio does this investment represent?
(exclude emergency savings, pension fund contributions and residential investments)
Use the examples below to determine your own figure and then apply this to the scoring procedure below:

Lump sum contributions

Assuming you decide to invest R12 000 of your total investment portfolio of R20 000, your percentage
would be:

(R12 000 ÷ R20 000) x 100 = 60%

Monthly contributions
Assuming the value of your current investment portfolio is R20 000. In addition, you decide to invest
R350 per month. Multiply this monthly amount by the number of months you intend to invest for.
Assuming an investment over 36 months:

[(R350 x 36 months) ÷ R20 000 + (R350 x 36 months)] x 100 = 39%

Less than 25% 8

Between 25% and 50% 7
Between 51% and 75% 3
More than 75% 2
POINTS

TOTAL POINTS FROM ALL 12 QUESTIONS

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STEP THREE
Match your total score to one of the following portfolios .

Investing for less than 2 years If your points total 70 or below If your points total between 71 and 130

25%
40%
100% 50% 50%
35%

PRESERVATION PORTFOLIO CONSERVATIVE GROWTH PRTFLIO BALANCED GROWTH PORTFOLIO

If your points total between 131 and 175 If your points total above 175

Gilt unit trusts

30%
100% 100%
Cash unit trusts
70%
Equity unit trusts

HIGH GROWTH PORTFOLIO AGGRESSIVE GROWTH PORTFOLIO

STEP FOUR
Select a basket of unit trusts which reflects the portfolio or asset mix suggested. Start by writing
down your asset mix:

PORTFOLIO/ASSET MIX PERCENTAGE RAND AMOUNT

Equity based unit trusts % R
Cash based unit trusts % R
Gilt based unit trusts % R

Source: Standard Bank Fund Managers, 1997

Sunday Times