Basics of Investing

Collective investments like Unit Trusts have lots of advantages. You require far less money to buy them, you can invest small amounts on a regular basis, you are spreading risk across a number of companies or different types of assets, and the dividends and interest can be added back into the investment to make them grow faster. In fact, they are the ideal gift for a grandchild, particularly when they are ear-marked for a particular purpose. A parent can open a unit trust fund account in a child’s name. While the child will not be able to transact, the parents or other family members can make tax-free donations, up to the annual exemption, to the account. Parents should, however, note that any taxable income that results from such donations will still be deemed to be theirs for tax purposes while the child is a minor.

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