A pathway to financial growth for Namibians though Unit Trusts

Investments and savings are essential to both economic stability and financial security.A unit trust is among the greatest and easiest investment solutions available. Long-term wealth accumulation and inflation coverage are guaranteed by this investing instrument, particularly in light of Namibia's recent history of rising annual inflation rates, which peaked in August 2022 at 7.3%Inflation has nevertheless decreased significantly since then and currently is 3.2% for January 2025 according to the NCPI Index Bulletin of January 2025. Unit trust savings becoming an option for Namibians increases financial security, keeps money worth its value and purchasing power, enhances nation economic stability, and inter-generational prosperity transfer.The earliest known unit trust was established in the United Kingdom in 1868 as the Foreign and Colonial Government Trust, marking the beginning of unit trusts in the 19th century. The goal was to reduce risk while providing investors with diversified exposure to financial markets. Over time, unit trusts have become a popular investment product all around the world because they give individual investors flexibility and expert management.People can build wealth over time by following a steady and disciplined saving plan, which serves as a buffer against unforeseen costs. When these savings are put into products like unit trusts, compound interest multiplies growth. Long-term exponential growth results from investors reinvesting profits to increase the dividends paid on their funds.IndebtednessAccording to the Bank of Namibia's 2024 Financial Stability Report, household debt as a proportion of disposable income was 40.5% in 2023. Indebtedness at this rate by households is unsustainable in the long term, and a long-term culture of saving and investing would reduce the burden of debt on Namibian households and free up disposable income for productive pursuits and strengthen the economy. This results in a strengthened consumer with greater purchasing power and consumer-initiated spending and growth - which is more productive from a resource allocation perspective and will result in better long-term economic sustainability when supported by productivity-driven growth.To Namibians, unit trust savings are an ideal means of wealth creation. For the developing nation of Namibia, there are financial constraints that incorporate inflation, foreign exchange fluctuations, and lower exposure to conventional financial products. Unit trusts like the Old Mutual Money Market Fund provide ordinary Namibians with access to the prospect of investing in a diversified group of securities, managed by professionals, and constructed with a diversity of risk orientations and investment horizons.Additionally, unit trusts provide accessibility and affordability, making it possible to begin investing with comparatively little capital. Unit trusts streamline the investment process for exposure to the wider market when compared to direct equity/stock market investment.Inflation, as a global economic phenomenon, reduces the purchasing power of money. Money, when left in ordinary bank deposits earning little interest, loses its purchasing power. Investment in unit trusts, however, is a hedge against inflation. Historically, returns on well-managed instruments like the Old Mutual Money Market Fund have exceeded inflation rates, leaving investors whole and even growing their purchasing power. Domestic investmentA country's degree of economic development largely rests with its own savings and domestic investment tendencies. Large levels of overall savings bring about capital accumulation, making room for infrastructural expansion, growth of enterprises, and employment. In Namibia, higher local savings create financial growth, stabilise the economy, and lessen reliance on foreign funding. By investing in unit trusts, Namibians can help the country finance domestic businesses, support entrepreneurial endeavours, and establish long-term economic stability.The ability of unit trust deposits to create wealth across generations is one of their most significant advantages. Namibians can create money that will last for generations by using compound interest in conjunction with a long-term investment strategy. The earlier we begin to invest and save, the greater the chances of financial growth and security. Parents who invest unit trusts for kids build the foundations of money knowledge and stability for generations to come and live off inherited wealth.A unit trust saving is a powerful financial instrument that protects Namibians from inflation and promotes national economic progress. People can attain personal financial security and support Namibia's economic growth by cultivating a culture of disciplined saving and investing. Namibians may pave the way for long-term wealth accumulation and enhanced economic well-being for future generations by utilising the power of compounding and wise investment.* Tumelo Thudinyane is a portfolio manager at Old Mutual Investments Namibia.*

A pathway to financial growth for Namibians though Unit Trusts

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Namibian Sun 2025-04-04

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A pathway to financial growth for Namibians though Unit Trusts

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Namibian Sun 2025-04-04

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