Managed funds

There are several ways to invest. From 0ur studies, I realise the most viable option for me to start creating my wealth is via managed funds. I would like to start investing in property as well, but that I feel will have to be further down the track.

An interesting website to learn more is: http://www.moneymanager.com.au/investing/guides/managed_funds_guide.html.

From here, I will reproduce the following information:

Managed funds - also known as unit trusts - are vehicles that allow you to pool your money with a number of other investors into a single fund that then is able to invest in assets that might otherwise be out of your reach. Managed funds are what they say - funds managed for you by others - namely, investment professionals such as fund managers. Managed funds can invest in a variety of assets including shares, property and fixed interest or a combination of these. All managed funds have a prospectus which allows you to see where it is investing.

The attraction of managed funds is the diversification they offer. If you wanted to invest in shares but only had $1,000, realistically you could only invest in one company. If the company performs badly, you could lose your money. But if you invest that money in a managed fund, depending on the fund's profile, you may have an interest in 10, 20 or even 50 Australian or international companies. The same applies to property trusts. You may want an exposure to property in your portfolio but cannot afford to buy a house. If you invest in a property trust, then depending on the sector it invests in, you can have exposure to major shopping centres, CBD office blocks, or a leisure resort.

Investing in a managed fund also gives you the benefit of a professional fund manager. Fund managers have access to much more research than the average investor and presumably a better knowledge of investment markets. Of course, you won't necessarily have the control to choose the individual investments made by the fund manager, but with thousands of managed funds now on the market, you'll certainly be able to choose a fund that reflects your risk profile and closely mirrors the choices you might yourself have made. However, be aware that not all fund managers make money for their investors. You need to do your own research to ascertain how comfortable you are with a fund manager's approach to investing.

If you decide to invest in managed funds using a regular savings plan, because you are contributing a set amount each month, managed funds are also a simple and convenient savings vehicle.

How much do I need to invest in a managed fund?
Usually you need to invest a minimum amount of $1000 to buy into a managed fund although some let you start your investment with as little as $500, especially if you also commit to a regular savings plan where you add to your investment on a monthly basis from as little as $100.
When you invest in a managed fund, you are buying units of equal value in the fund. If the value of the investments owned by the fund rises, then so too does the value of your units. If the value of the investments fall, then so too does the value of your units. The value of the units that you have invested in at any time is the market value of the fund's investments divided by the number of units issued, less any debt. This is known as the net asset value.

Types of managed funds
Managed funds can be both listed and unlisted. Those that are listed can be traded on the stockmarket and have a market value that is determined by supply and demand. These funds tend to be closed - that is, there is a finite number of units on issue.

Non-listed funds can be either open or closed. If they are open, new units are issued to meet demand with a new prospectus released every six months or so. Unlisted funds are valued at least weekly, if not daily, by the fund manager. The value is calculated by dividing the current value of the total assets plus either the buying or selling costs by the number of issued units. If you want to sell your units in an unlisted fund, you need to contact the fund manager who will have set out in the prospectus how quickly you can access your money. It is usually no more than two weeks and often within day