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RULE # 1 Choose low cost funds
In certain instance, the sale charge could mean the difference between good returns and poor return. Always go for low cost funds wherever possible. In fact there are a few no load funds available that you can choose. The general rule is the lower the cost, the better the performance returns.

RULE # 2 Consider the cost of advice
Unit trust agents, life insurance agents as well as financial planners can provide good advice on your investments. However do consider the cost of advice. Check out the qualifications and experiences of the financial advisor before you make a decision. If you are new to fund selection, it is better to go through a financial advisor.

RULE #3 Do not over depend on past fund performance
Selection of a particular fund should be an interaction between your risk profile and investment objectives. Do not just depend on past fund performance as your sole criteria in fund selection.

RULE # 4 Donít own too many funds
Owning too many funds would inevitably lead to over diversification and thus may lead to under performance. Anything more than four types of funds is definitely too many.

RULE # 5 Awareness of asset size
Usually when a fund asset size gets too big, it may be difficult to achieve an optimum return to the investors. However, be careful with a fund asset size that is too small. In Malaysia, our fund asset size can be quite small and thus the costs can be quite high.

RULE # 6 Use past performance to determine consistency
Past performance can be a good guide to determine the consistency of a fund. Go for those funds that has at least six years in the top two quartile and a maximum of only one-year in the bottom two quartile.

RULE # 7 Buy your fund and hold it
Fund investment is meant for the medium to long term time horizon. Regularly trading can result in losses because of the costs involved. Buy your fund and hold it for a reasonable time frame.

Jeffrey Chiew Kim Chwee

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