Beginner Investing

Unit trusts, Index Trackers and ISAs

Having digested the section for investing in the stock exchange you may feel that whilst you can appreciate the advantages and prospects of good returns you do not feel that you have sufficient confidence, Knowledge or time to investigate possible companies to invest in.

There are alternatives and they are Unit trusts, Index Trackers and ISAs

First Unit Trusts, These have been around for many years and are run by investment professionals. If you invest in one of these they place you money into various investments and hopefully your money will grow. However they do have overheads that need to be paid for such as their wages, costs of buying and selling shares etc.

Index Trackers, These have only evolved over the last 30 years or so and are based on and entirely different system to unit trusts. A tracker index fund is a fund that invests in shares that mirror the stock market. Therefore in theory the funds performance should be very similar to the stock markets performance, and generally is.

The advantages of Index Trackers over Unit Trusts are that they do not have the large overheads of the unit trusts. Therefore their management charges are considerably less. Statistics produced over the last 30 years show that tracker indexes generally out perform unit trusts and are consequently a better investment.

ISAs are similar to tracker index investments, the differences are explained in the web site below.

To find out more about these managed funds we suggest that you visit www.fool.co.uk and click on “investments” on the right hand side. Also uk.biz.yahoo.com/09032007/35/become-great-investor.html gives some good recommendations on the index trackers to invest with.