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Monthly investment plan |
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Monthly investment planA plan in which a certain amount is invested each month in order to benefit from dollar cost averaging.Monthly investment plan Similar MatchesUnit investment trustUnit investment trustMoney invested in a portfolio whose composition is fixed for the life of the fund. Shares in a unit trust are called redeemable trust certificates, and they are sold at a premium to net asset value. Dividend reinvestment planDividend reinvestment planA plan which allows private investors to reinvest cash dividends from their investments cheaply and easily back into the market, and so obtain the benefits of compounding.The Plan is managed by an administrator appointed by the company. On the dividend date, shareholders who join the plan are still paid the cash dividend, but the administrator then uses the cash to buy shares in the company on behalf of the shareholder. Any cash left over is sent to the shareholder in the normal way. Dealing commission on such purchases is usually 1%. Note that the Plan Administrator does not have to make the plan available for any and every dividend that the company pays. If it is not made available, shareholders will receive the cash dividend. InvestmentInvestmentThe creation of more money through the use of capital. Approved investment trustApproved investment trustAn investment trust which satisfies certain conditions set by the tax authorities and accordingly is exempt from tax on capital gains made on profits from sales of investments within its portfolio.This ability of investment trusts to trade in and out of shares gives them an advantage over private investors who, in considering whether to sell shares, are bound to have one eye on the capital gains tax liability that they might incur. Investment trustInvestment trustA company quoted on the London Stock Exchange which invests its shareholders' funds in the shares of other companies.Points to note about investment trusts are:They enable private investors with limited funds to get diversified share ownership and without incurring heavy dealing costs.They enable investors to get exposure to markets that they may not be able to reach themselves (e.g. to emerging countries). Different trusts also have differing objectives (e.g. growth or income).They enable investors who don't have the skill or inclination to invest directly in companies to get the advantage of professional fund management (although see point below 6)It is easy for investors to drip-feed money into investment trusts over time by using a monthly savings plans.Unlike unit trusts, investment trusts are closed end funds. That is, there is a fixed number of shares in circulation, and the price of those shares is determined like other quoted shares - by supply and demand. This means that IT shares often trade at a discount to their Net Asset value (i.e. the value of their underlying investments) and it also makes IT shares more volatile than unit trust prices.ITs are actively managed funds which try to produce total returns better than the market average. However once management charges are taken into account, they often fail to meet this target. Hence the move by many investors to passive funds - trackers and index funds - which have lower charges. Further SuggestionsExpected return on investmentprotected investment products Investment letter Investment Management Regulatory Organisation Unit Share Investment Trust (USIT) Registered investment adviser Overinvestment Target investment mix Green field investment Reinvestment rate Systematic investment plan Automatic reinvestment investment Independent investments Temporary investment Leveraged investment company investment business Community Reinvestment Act (CRA) Association of Unit Trusts and Investment Funds Normal investment practice Registered investment company Investment agreement investment bond Ethical Investment Research Service Foreign Direct Investment |
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