How a Unit Trust can be your Education Fund

28 Aug 2017 | Back to Blog

When considering a Unit Trust, like any other form of investment, your main concern is likely to be, “What’s in it for me?” Sometimes it helps to know how someone else has made a particular investment choice work. After all, there’s nothing like practical application to make sense of a great theory.

Here are some Unit Trust stories of people who took advantage of medium and long-term returns to fund education.

Back to School Again

Tricia was recently promoted to Regional Business Development Manager. For a little over 11 years, Tricia was the reliable, dependable senior account executive at a prominent ad agency.

Her work helping to shine a spotlight on brands and products is a far cry from her first degree in Geography and Environmental Science, and she was determined to go back to school and earn her MBA with a specialisation in Traditional & New Media Marketing. She needed the confidence boost to shoot for one of the many positions that would become available and wind up being filled by bright-eyed, bushy-tailed fresh graduates she still had to train and advise.

MBAs are expensive. As a 30-something professional with a mortgage, Tricia decided to draw on her unit trust investments to fund her second degree. Six years ago, once she had decided that a second degree was the best way to go, she bought some units in a Unit Trust Fund. She started with $250,000 and was able to buy more units, adding $15,000 to her investment each month. Now she only needs to decide whether to cash in some of her units to foot the MBA bill or use the investment as collateral for a loan to do it.

An Officer and a Planner

“My twin girls are now about to start fourth form at the best high school in Jamaica and my son just got placed there through the Grade Six Achievement Test (GSAT). Over the years, a policeman and his teacher wife have had to learn how to make every penny work for a family of five,” he says with a smile as he gestures towards a family portrait on his desk.

Raymond has spent all his adult years as part of the Jamaica Constabulary Force. A committed public servant, his promotion to Senior Superintendent of Police was applauded by many in the communities where he has worked assiduously over the years and among his peers far and wide.

He is known for his financial savvy and often called upon to advise young police officers on how to invest a little bit of the little they earn. He credits his unit trust investments with funding the smooth transition of his twin daughters from primary to high school.

Lately he has taken to using the explanation from his new preferred unit trust managers, VM Wealth Management to explain this investment option to his younger or less-experienced co- workers. “A unit trust is a form of collective investment. It allows investors to take advantage of investment opportunities in a wide variety of instruments which would not normally be available to them as individual investors.”

Indeed, unit trusts are the combined resources of many different investors who have entrusted their money to VM Wealth Management or some other management company. The management company buys shares on behalf of the investors. These shares are then combined in a portfolio and divided into equal “units”. Each investor receives a certain number of units for the money he has entrusted to the company that manages the unit trust.

“I see my unit trust investments as a sophisticated, medium-term or long-term partner plan. I don’t need to have any deep knowledge of investment or the stock market or real estate. My money is put to work by qualified professionals weighing the risks.”

Gifts for the Grandbabies

Mabel and Collin have made investments on behalf of their grandchildren from the moment they are born. Christina was the first to benefit. Their first grandbaby, she was the apple of their eyes. A little cherub with sparkling eyes who knew her ABCs backwards by the time she was 20 months old, Chrissie looked a lot like her father, their youngest son Chris, and was twice as brilliant. The older couple invested in a Unit Trust on Christina’s behalf, insistent that she would have whatever support she needed once she was ready to go off to university. In May of 2016, Christina graduated magna cum laude with her Bachelor of Science in Biological Engineering from a prestigious university in New England in the United States. Some of the expenses living away from home and a number of the requirements Chrissie had to be able to stay an honour student throughout, were met by the returns on the Chrissie Education Fund, a little unit trust choice that Grandma and Granddad made when she was only a day old.

They used an NHT refund cheque plus some savings to start with a lump sum of $265,000. After a few years, Christina’s parents started making regular contributions to the Chrissie fund as well. It became a real bonding experience for the family.

Mabel and Collin now have a new grandchild. Their seventh, Malik, was born three days shy of Christina’s graduation and Mabel insists that at only a year old, he’s already Prime Minister material! Forget grandma bias, it simply makes sense to plan. It is no wonder that the doting grandparents were two of the earliest in the door when VM Wealth Management ventured into the Unit Trust arena in 2016. They have both been VMBS members for half a century. They are happy to now have a product they love in the hands of their trusted group and lifetime financial independence partners. Malik is in for a bright future!