Unit Trusts - Are They Secure?

Stuart-Vaughan

My wife has inherited a few thousand pounds of Unit Trusts from her late mum's estate. We have no experience with the stock exchange, investments, stocks, unit trusts etc so are out of our depth. Are Unit Trusts a safe bet? Are Unit Trusts a safer place to store capital when the stock market next crashes, or will they be wiped out? Should we take out the money and instead put it into Gold? Stock market crashes take place around once every 10 years, and it is 10 years since the last one... so we don't want to lose everything and so wonder, are they safe?

george4064

Which unit trusts has she inherited?

xylophone

Which UTs and what is the value of each holding?

ChesterDog

Stock market crashes are rather random, but investments (IF they are well diversified) will recover if you let them and give them time.

Much depends upon the nature of these particular unit trusts.

Stuart-Vaughan

400 units with Axa Framlington Global Opps Fund R ACC

1253 units with Aberdeen European Equity
347 units with Jupiter Income Trust
2212 units with Schroder UK Equity - these 4 are with Old Mutual Wealth, collective investment

400 units with Allianz Continental European Fund A Class Acc

3175 units with St James Place Unit Trust

IanSt

Stuart-Vaughan wrote: »

Are Unit Trusts a safe bet? ... Stock market crashes take place around once every 10 years, and it is 10 years since the last one... so we don't want to lose everything and so wonder, are they safe?

Disregarding the very small chance of some kind of fraud etc, then as most of your Unit trusts are mostly invested in company shares then your unit trusts won't become worthless unless every company in which they are invested goes bankrupt. Now yes some companies do crash and become worthless, but they are the not the norm and it historically has only taken a few years for the market to recover their pre-crash levels.

The way that you do definitely lose money is when you see their price at 1/2 of what they were and sell them before the market has a chance to recover. If you think that you would do that, then it may be best to sell them now - though who knows when the next crash might come, it could well be several years in which case you would lose out by selling now.

Personally I would be thinking more of when you would want to get at the money held via these unit trusts. If you wanted to buy something within the next few years then I personally would think of selling them, but that is purely because stock market investments are really long term investments of at least 5 years and preferably more like 10, not because they are unit trusts.

ValiantSon

Stuart-Vaughan wrote: »

My wife has inherited a few thousand pounds of Unit Trusts from her late mum's estate. We have no experience with the stock exchange, investments, stocks, unit trusts etc so are out of our depth. Are Unit Trusts a safe bet?

As a starting point have a read of something like http://monevator.com/, which will give you some insight into investing, and perhaps combine this with https://www.investopedia.com/uk/.

Personally, I don't use unit trusts. I invest in OEICs.

Stuart-Vaughan wrote: »

Are Unit Trusts a safer place to store capital when the stock market next crashes, or will they be wiped out? Should we take out the money and instead put it into Gold?

No, don't put it into gold. Gold is highly volatile and all of your investment would be in one asset. If that asset tanks then you've lost a huge amount and are dependent upon that one asset rising significantyl again to recover from your losses. What you actually want to do is create a diverse portfolio of investments, which will protect you from wild swings in one particular equity or asset. (This is not to say that you won't, over time, potentially see big falls in the value of your investment. If you stay invested, however, you can reasonably expect those losses to be made up and see further growth as the market recovers.

Have a look at multi-asset trackers, e.g. HSBC Global Strategy, Blackrock Consensus, or Vanguard LifeStrategy.

Stuart-Vaughan wrote: »

Stock market crashes take place around once every 10 years, and it is 10 years since the last one... so we don't want to lose everything and so wonder, are they safe?

Crashes are not as easy to predict as that. If they were then we would all sell just before and then buy in again when the market bottoms out. You need to stay invested throughout a fall and, if you can afford to, actually invest more at a low pint to increase the size of your investment at cheap prices and then watch the value rise over the next few years as the market begins to recover.

Stuart-Vaughan

Thanks everyone for your advice.

eskbanker

ValiantSon wrote: »

You need to stay invested throughout a fall and, if you can afford to, actually invest more at a low pint

i.e. be optimistic instead of seeing the glass as half empty?

xylophone

If you wish to stick with stocks and shares, you might consider selling the existing investments and looking at a Vanguard ISA using the life strategy funds.

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

http://monevator.com/using-vanguard-lifestrategy-funds-life/

ValiantSon

eskbanker wrote: »

i.e. be optimistic instead of seeing the glass as half empty?

:rotfl:

Yes, the lack of a properly working edit button frustrated my attempts to correct that typo, but I like your interpretation!