Advantages and disadvantages of trust management

Investment trust management is a popular method because it allows you to invest your own money in stocks and securities, even without having your own strategy and knowledge to do so. When deciding to use the trust management method and sign a contract with a manager, it is important to evaluate all the advantages and disadvantages of this method.

Advantages of trust management

1. Trust management of money has a higher return than a bank deposit.

2. The investor receives access to the stock and securities market.

3. Low entry threshold - for example, in mutual funds (Mutual Funds) or PAMM trading.

4. Investors do not need to constantly monitor the stock market, evaluate market movements and make decisions about buying or selling securities. All decisions are made for you by a trust manager.

5. You can diversify your portfolio and choose different managers or coordinate the purchase of different assets.

6. The investor controls his deposits, and the manager does not have the opportunity to simply withdraw them from the account.

Disadvantages of trust management

1. Profit is not guaranteed. Money in trust management is not protected by the state deposit insurance system.

2. This is a high-risk investment method, so it is important to follow the rules of risk management so as not to lose your capital.

3. Income directly depends on the decisions of the intermediary, winning or failing. Therefore, it is important to choose the right trustee.

4. The greater the potential yield, the higher the risks.

5. Danger of fraud on the part of the manager. When entrusting your funds to a manager, it is important to choose a company that has confirmed its high credit rating and guarantees the safety of the deposit.

6. High commissions, which the trustee receives. On average, once a quarter is charged 1-2% of the invested amount. In addition, a commission of an average of 15% of the received profit is charged.

7. You have to pay income tax on the profits of the investment.

8. In some companies it is not possible to withdraw funds at short notice, and the terms can take up to 20 days.

What assets can be put under trust management?

Under trust management, the investor transfers the right to dispose of his assets to the trustee, but the property right remains with the owner of the assets.

The trustee only makes decisions about investing in certain shares, bonds, or securities, but he administers them only in the interests of the principal. The powers of the trustee are not unlimited - they are regulated by law and the agreement between the parties.

The following assets may be handed over to management:

• money allocated for investment;
• immovable property;
• enterprises and other property complexes;
• securities;
• exclusive property rights.

All peculiarities of the transfer of rights to assets are fixed in the contract and must be observed by the parties.

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