“I Lost Money Investing In Unit Trusts(UT) From The Bank”

There are plenty of stories of how people lost money through investing in Unit Trust from banks.

My family, our clients and many other people that we met lost money from banks.

Not only do they lose money, they also lose all the precious time waiting for the investment to breakeven.

After reviewing numerous investment portfolios, it can be concluded that there are 3 possible reasons on why they lost money.


Most of those who lost money through UTs in banks invested in a lump sum. Meaning a one time payment of a huge amount. 

The problem with lump sum investing is that you will need to be able to predict when is the best time to enter and know which fund to enter in.

And this is something even the best investors in the world are unable to do.

If you invested at the wrong time, one slight dip in your UT could mean YEARS to breakeven.

Source: Krakenimages

Here’s an example:

If you invested at $1 and the price drops to $0.50. You have just lost 50%.

But in order for you to earn back that $0.50 and breakeven, your remaining $0.50 needs make 100%.

And if a fund makes 10% a year, that’s roughly 10 years to breakeven!


Most banks and UTs have front end fees.

Meaning if the upfront sales charge is 5%, and you put in $100, you would have already lost $5 even before you started investing.

And to cover back that $5, your remaining fund money of $95 needs to make 5.26%..

Source: Markus Winkler

Seems okay right? It’s only 5%. But what if your fund loses money on the first year by, let’s say, 10%?

You would have lost 15% already. And to make back up that 15%, your fund needs to perform at 18% on the second year to breakeven!

And not many funds can achieve that 18% returns.. If your fund performs at 6%(which is the avg returns of UTs), it’ll take you 3 years just to breakeven!

Which leads me to my last point..


That is why, if you’re planning to invest lump sum with that kind of fee structure, you will need PINPOINT ACCURACY to pick the RIGHT funds at the RIGHT time.

Unfortunately, even the greatest investors in the world are not able to do that. No one can predict the future.

Source: Getty Images

The best you can do to reduce such risks is to have a sound and systematic portfolio management strategy to adjust accordingly.

However, we find that most people chose to put their portfolio aside and neglect it instead, party due to time constraint and/or insufficient knowledge.


💰 1. Invest monthly instead of lump sum so that you can invest more when market is low and invest less when market is high.

💰 2. Choose a platform which charges you back end fees instead of front end.

Or if a platform charges front end fees then make sure they have certain benefits upfront like a cash bonus.

💰3. If you’re planning to rely on others to manage your investments, make sure they have a proven strategy with a proven track record that their strategy works.

Are they able to explain what they invested in, why they invest in it and how they conducted their research to make that investment decision?

If they are not able to do that, then it’s no different from you going to buy TOTO and put in all your luck and somehow win that 1 million dollars. 

It is not a long term solution because it is not a repeatable process and they do not have the capabilities to generate the same returns for you in the second year.

Please do your own due diligence!

Source: Adi Goldstein

If you’re planning to DIY, make sure to diversify across different asset classes that suits your risk appetite. 

You should design your portfolio carefully such that you should be able to sleep well at night while your portfolio grows steadily in the long run.

Also, most importantly, if you plan to DIY, make sure that you are ready to commit to learning and taking action as stopping halfway might leave you with a costly lesson.

If you require any assistance or input, feel free to contact us here or any of our platforms.


Disclaimer: This post is for your information only and does not constitute any form of financial advice, you may wish to seek advice from a financial consultant before making a commitment to purchase any product.