Friday, 24 June 2016

Step by Step Guide to UITF Investing

How do you earn from UITF?
After subscribing/investing to a UITF, the bank will give you details such the Number of Units Purchased and the NAVPU (Net Asset Value per Unit) during the day the units were purchased. 

Note: Since the end-of-day NAVPU will be used to determine how many units will be purchased given your invested amount, you'll only be informed of the Number of Units Purchased on the next banking day. Some banks (like BPI) email the information, while some will ask you to call or visit the bank to know the details (depending on the bank, a Certificate of Participation (CoP) that contains the Number of Units Purchased and NAVPU, will be issued). 

Your investment will earn (also referred to as "paper gain") once the NAVPU increases, as compared to the NAVPU during the time you bought your units. On the other hand, if the NAVPU decreases, you'll have a "paper loss". Note that the gain or loss will only be realized once you redeem or sell your units. When you sell your units, the end-of-day NAVPU will be used in the calculation of the total amount that you will receive.


Some Formula to Remember:
Number of Units Purchased = Invested Amount / NAVPU during the date when you subscribed to the fund
Current Amount of Investment = Number of Units Purchased x end-of-day NAVPU
Gain (or Loss) = Current Amount of Investment - Invested Amount
Return on Investment (ROI%) =  (Current Amount of Investment - Invested Amount)*100 / Invested Amount 
Note: For the Gain and ROI%, if the result is negative, it means you have incurred a paper loss


Supplementary Notes:
Below are articles about UITF investing that will also be helpful to potential UITF investors. 
http://www.makeyourpesogrow.com/2015/01/planning-on-investing-in-uitfs-chirp.html
http://www.makeyourpesogrow.com/2015/01/are-you-aggresive-or-conservative-risk-profile-assessment.html
http://www.makeyourpesogrow.com/2015/02/tips-on-uitf-investing-for-newbies.html
http://www.makeyourpesogrow.com/2015/02/all-you-need-is-1000-pesos-to-start-investing-in-uitf.html
http://www.makeyourpesogrow.com/2015/04/is-it-possible-for-ofws-to-invest-in-uitf.html


How to create and maintain a UITF account?
1. After deciding on the UITF that you want to invest in, you may head to the bank and ask a staff (or the guard) where you can inquire about UITFs.
2. The bank staff will ask you to fill up the necessary forms, including the Investor Risk Profile Assessment.
3. Usually, they will require you to have an account with them that you can nominate as settlement account. If you don't have an account with the bank, ask the agent if they have a zero-maintaining balance settlement account. If they don't have such, just open an account with the least maintaining balance.
4. Once you already have a settlement account, deposit the amount that you want to invest. When you subscribe to a UITF (whether through the agent or via online banking), the amount will be debited from that account. At this point, you already have a UITF account. :)
5. Some banks provide Certificate of Participation (CoP), like Security Bank and PNB, as acknowlegment of your investment. It contains the amount invested and the number of units purchased (keep the CoP since you'll need it when you want to sell your units already). But some, like BPI, only shows you the subscription details online (however, you can request for a copy of the subscription details, if you want).
6. You can monitor the daily NAVPU through the bank website. Check the corresponding NAVPU of the fund where you invested.
7. To know the current amount of your investment, just multiply the total number of units purchased with the end-of-day NAVPU.
8. To sell or withdraw your investment (also referred to as redemption), go to the bank and inform the bank staff that you will redeem your units already. If CoP was issued to you previously, bring it during redemption. If the bank has an online banking facility, redemption can be done online, no need to go to the bank (however, you may need to enroll your UITF first to your online account). Also, depending on the bank, you can do partial redemption only (the rest of your units will still be invested).  After selling your units, the proceeds will be credited to your settlement account after several days 
Note: The number of days it will take for your money to be credited to your settlement account varies per fund. Refer to the Fund Matrix in http://www.makeyourpesogrow.com/p/fund-matrix.html to check the Settlement Date (in days) per fund.


In case there are still questions, don't hesitate to leave a comment or send me a message. Happy investing! :) , , ,

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