Investing for retirement: Unit trust vs. OEIC

Know the pros and cons of investing in unit trust and OEIC.

11:03 31 January 2013

A lot of people know how to make money. They go to work or manage their business and they can get a wage. However, not all of them know how to grow their earnings.

For those people who are looking forward to retiring early, earning passive income, and beating the inflation, they have several options. They can invest in ISAs, investment bonds, unit trusts, capital protected products, and investment trusts and shares.

These days, the most popular and some of the most accessible even to smaller investors are Unit trust and OEIC. But which one is best for you?

Unit trusts are collective investment funds that allow even small investors access different bonds, shares, and properties. Unit trusts are open-ended. This means that additional units can be created when the need arise.

The unit price goes up and down to effectively reflect the value of the investments. The price usually changes everyday.

OEICs on the other hand, are largely similar to unit trusts. They issue shares instead of units. The shares also move up and down just like unit trusts. The only difference is that OEICs sub-funds are single-priced while unit trusts have a buy and sell price.