Unit trusts offer an easy, convenient way to invest. Simply put, a pool of investors' money (money from people like you and me) is used to invest in financial instruments such as equities (shares) and bonds. This pool is then divided into equal units where each unit contains the same proportion of assets in the fund. The fund is managed by scarily clever individuals called portfolio managers, and their teams. Investors then share in the fund's gains, losses, income and expenses.

Why would I invest in unit trusts / funds and not buy shares directly?

The advantages of investing in the stock market through unit trusts are numerous. For a start, it's much cheaper this way. Secondly, there's a lot less risk. You see, your unit trust or fund is made up of lots of different shares. If one share performs badly, it's buoyed by the good performance of another.

Here are a few more benefits: 

• You can access the stock exchange without needing knowledge or experience of investing. 
• Unit trusts are tax-efficient, providing tax exemptions on interest income and capital gains tax. 
• Unit trusts offer exciting capital growth opportunities over the medium to long-term. 
• You can buy, sell and switch units in your portfolio online. 

The wide variety of unit trusts you can choose from means that they are an ideal way to build up a well-diversified investment portfolio tailored to meet your specific needs, risk profile and investment requirements. Some funds invest in a different industries while others invest in just one like mining, financial services, gold or technology. These are a bit riskier because they are invested in one industry and not spread across a few.

As a newbie to the unit trust world of investing it's best to stick to a fund that is well diversified. Then sit back and let the experts do their job!

Need some help?

We know that investing can be a little tricky. Our friendly financial advisers are on hand to help you make the right choice for your needs and goals. You can choose a face-to-face or telephonic discussion. If you prefer to do a little more research in a relaxed, fun way and earn some rewards in the process, visit Old Mutual Rewards here. You can also download the Old Mutual app to stay up to date with your rewards and investments. Visit the Apple App Store, Google Playstore (device-dependant) or Huawei App Gallery to get you started.