How I Invest in Money Market UITFs

Summary - look for a trust entity that has an online platform where you can easily subscribe and redeem UITFs - look for a UITF that has 0-day subscription and redemption settlement dates - subscribe to a UITF on the first day of the month - hold it for a month - realize your gain at the end of the month - repeat Unit Investment Trust Fund (UITF) is an open-ended trust fund wherein the investors' cash is pooled together, operated, and managed by a trust entity. Money Market Funds are funds that invest principally in short-term, fixed-income deposits and securities with a portfolio duration of one year or less. Step 1: Look for an online platform Search for a trust entity with an online platform that allows you to easily subscribe to and redeem UITFs. This is a crucial step, as it will save you time and streamline the subscription and redemption process. I used to do this manually with my previous trust entity. Every time I wanted to subscribe to a UITF, I had to visit one of their branches and complete paperwork. The same process applied when redeeming. Imagine the time, effort, and resources wasted! Thankfully, we now live in the digital age—these processes can be done online. Take the time to explore different trust entities and confirm whether they have an online platform for hassle-free UITF subscription and redemption. Step 2: Look for a UITF with sustainable performance UITF returns vary each year depending on market conditions. Money market UITFs are relatively stable and tend to avoid the erratic fluctuations of bond or equity-based UITFs. I recommend choosing a money market UITF that demonstrates consistent and sustainable upward performance throughout its lifespan. However, always remember the common disclaimer: past performance is not indicative of future results. That said, reviewing a UITF's historical performance can provide valuable insights. Generally, the longer the fund has been in existence, the better the data you'll have to guide your decision-making. Be sure to thoroughly read all publicly available documents related to the fund, weigh the pros and cons, and, if necessary, contact or visit the trust entity for clarification. Never neglect your due diligence. Step 3: Subscribe to the UITF on the first day of the month Begin subscribing to the UITF on the first day of the month, though you can choose to start on any day that suits you. For instance, you might decide to subscribe on January 11th. Ultimately, the specific day of the month doesn’t matter. The key is to establish a consistent starting date that you can automatically follow for future subscriptions. Step 4: Hold for a month This part requires patience—hold on to your investment for at least a month to give it time to grow. During this period, feel free to check its performance whenever you like, but remember, patience is key. Think of this as the stage where your money is quietly working hard behind the scenes. If you'd like, you can choose to hold your investment for longer periods, such as quarterly, semi-annually, or even annually, depending on your financial goals. Step 5: Redeem at the end of the month At the end of the month or your preferred holding period, redeem your UITF to realize the paper gains from your investment. Step 6: Repeat steps 3 to 5 Continue repeating steps 3 to 5 each month. The idea here is to realize your monthly paper gains, reinvest those gains into your principal on the first day of the next month, hold the investment, and redeem it on the last day of the month. This cycle embodies the powerful concept of compounding—one of the most remarkable financial principles humanity has discovered. Why I invest in UITF What I appreciate most about UITFs, aside from offering better returns compared to a regular savings account, is the tax advantage. You’re not taxed when you realize your gains because your trust entity has already taken care of that for you—saving you the 20% withholding tax. Additionally, UITFs are exempt from the central bank's reserve requirement. This means that your trust entity cannot use your invested funds to provide loans to others, which is a common practice for banks with regular savings accounts.