Smart Ways to Buy Investment Trusts

 [Smart Ways to Buy Investment Trusts]

Investment trusts (funds) are convenient financial products that allow you to diversify your investments in stocks, bonds, and other assets, but you can also lose money if you buy them incorrectly.

The key points for a "smart way to buy" are long-term, diversification, low cost, and automation. We will explain these points in order below 👇

🧭 1. Clearly Define Your Investment Goals and Time Horizon

First, it's important to clearly define "why you are investing."

For example:

To buy a house in 5 years

For retirement funds in 10-20 years

To save for education expenses

Once you have determined your goals and time horizon, the level of risk you should take and the type of products you should choose will become clear.

👉 The basic principle is to minimize risk for short-term investments and incorporate growth assets (primarily stocks) for long-term investments.

📊 2. Choosing Index Funds is the Basic Approach

There are two main types of investment trusts:

Active funds: Fund managers aim to outperform the market average.

Index funds: Track a market average (e.g., Nikkei 225, S&P 500).

For beginners to intermediate investors who want to steadily increase their assets, index funds, which have lower fees and tend to grow over the long term, are the basic choice.

👉 Examples:

eMAXIS Slim S&P500 (US stocks)

eMAXIS Slim All Country World Stock Fund

Tawara No-Load Developed Countries Stock Fund

💰 3. Buy through Dollar-Cost Averaging (Regular Investing)

Since even professionals find it difficult to determine "when to buy," regular investing (dollar-cost averaging) is a smart way to buy.

When prices are high, you buy a little.

When prices are low, you can buy more.

👉 As a result, the average purchase price is leveled out, and risk is reduced.

*Utilizing tax-advantaged systems such as "Tsumitate NISA" makes it even more advantageous. 🪙 4. Fees (Costs) are Extremely Important

Investment trusts have the following costs:

Purchase fee (sales commission) → Choose "no-load" (free) funds

Management fee (operating cost) → Aim for 0.2% or less annually

Trust asset retention fee → Choose funds with no or minimal fees

👉 Even with the same performance, higher fees will result in a significant difference in returns after 20 years.

🌍 5. Be Mindful of Diversification

Concentrating on one country or industry increases the risk of losses.

US stocks only → Strong, but carries US-dependent risk

Global stocks → Naturally diversified internationally

Allocate a portion to bonds and cash → Helps reduce volatility (price fluctuations)

👉 If you're unsure, "one global stock index fund + a little cash" is the classic approach.

🧘 6. Don't Get Carried Away by Market Fluctuations

Investment trusts are fundamentally for long-term investment.

Selling when the market falls

Chasing short-term profits

👉 These are recipes for failure.

Over 15 years, index investing tends to be profitable in most cases (especially stocks).

📝 7. Review Regularly

Check your asset allocation about once a year

Confirm whether a major shift is necessary (rebalancing)

Avoid unnecessary buying and selling

👉 "Buy and hold" + "annual review" is often the most successful approach.

✅ Summary: How to Buy Investment Trusts Wisely

Point Content

Investment Objective Clearly define your goal and timeframe

Product Selection Index-type, low-cost funds

Buying Method Automate with dollar-cost averaging

Diversification Global or US + bonds, etc.

Fees Free purchase, low management fees

Mindset Maintain a long-term perspective and leave it alone

Review Once a year is sufficient