Fee pitfalls
The main costs of investment trusts include purchase fees, trust fees, and trust asset retention amounts.
| Fees | Contents |
|---|---|
| Purchasing fee | If it is charged when purchasing |
| Trust fee | Charged while holding |
| Trust property retention amount | In case of cancellation |
In particular, trust fees are incurred throughout the holding period.
In long-term investing, even a difference of 0.1% per year can add up.
While purchase fees are easy to see on the sales company's screen, trust fees and actual costs may be less noticeable. I would like to check the prospectus and monthly report to see the costs incurred while holding the stock.
Pitfalls of dividends
Mutual funds with high dividends look attractive.
However, dividends do not necessarily come from profits.
| Distribution | Points to note |
|---|---|
| Ordinary distribution | Paid from investment profits |
| Special distribution | Almost like a partial refund of principal |
| Monthly distribution type | Cases not suitable for asset formation |
If you want to increase your assets over the long term, it is easier to take advantage of compound interest by reinvesting rather than receiving dividends.
According to the Financial Services Agency's explanation of the NISA system, the accumulation investment limit covers products suitable for long-term savings and diversification. Monthly distribution type products or products with a short trust period may not be covered by the system.
Pitfalls of themed products
Theme-based investment trusts tend to become popular topics, such as AI, semiconductors, decarbonization, India, and space.
However, by the time a theme becomes popular, the stock price may have already increased.
| Notes on theme types | Contents |
|---|---|
| Anticipation leads | People buy before performance |
| Lack of diversification | Biased towards specific industries |
| Cost | Some products are expensive |
| Boom ends | Weakness due to capital outflow |
If you are buying a theme type, it is easier to manage risk if you limit it to a portion of your total assets.
Pitfalls of ranking buying
The products with the highest sales rankings are not necessarily the products that are suitable for you.
| What you can't see in the rankings | Contents |
|---|---|
| My purpose | Retirement funds or short-term funds |
| Risk tolerance | Can you withstand a decline |
| Cost | Is it a long-term burden? |
| Inside | What are you investing in |
Before buying a popular product, check the investment target and costs.
Pitfalls of adding too many products
Holding a large number of investment trusts will give you the illusion of diversification.
However, if the contents are similar, the diversification effect is limited.
| Combination | Notes |
|---|---|
| Orcan + S&P500 | US ratio increases |
| S&P500 + NASDAQ100 | US large tech leaning |
| Multiple global stocks | Duplicate content |
| Multiple theme types | Biased towards popular themes |
Look at the content of the investment target, not the number of products.
summary
Things that tend to go wrong with investment trusts include fees, dividends, theme-based products, ranking buying, and increasing the number of products too much.
For beginners, it is easier to manage investment trusts that are low cost, easy to understand, and can last for a long time.
Before you buy a hot product, make sure you know what you're investing in, how much it will cost, and whether it will last 20 years.