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Since unit trusts are an ideal long term investment incorporating a savings programme on a regular basis (preferably monthly) with low payments, this savings programme will certainly be affordable to many people. Provided a good quality manager has been selected, ringgit cost averaging will smooth out some of the effects of the stockmarket. Table 3 illustrates a hypothetical example of an investor who makes a RM1,000 investment every 3 months at the following purchase prices of a unit price during the uptrend as well as the downtrend in the stock market. Table 3 End of Quarter Price per unit Number of units bought September 1993 December 1993 March 1994 June 1994 September 1994 December 1994 March 1995 June 1995 September 1995 December 1995 March 1996 June 1996 1.00 1.30 1.10 1.08 1.13 1.07 1.06 1.11 1.09 1.08 1.17 1.12 1,000 769 909 926 885 935 943 901 917 926 855 893 Total 10,859 Total cost as at end of December would have been RM12,000. But the average purchase cost is only RM1.11 (RM12,000/10,859 units). More often than not, an investor is more optimistic during a bull run. In the example above an investor may have made an investment at the end of March 1996 during a rally at a higher price of RM1.17. Although the average purchase cost of RM1.11 may not be the lowest price but equally one has avoided putting all his/her money when the market is nearing its peak. Nevertheless, by making small amounts of savings every month, one can accumulate a substantial nest-egg using money which might otherwise be swallowed up on everyday expenditure. Building a nest-egg is essential in ensuring financial independence. There may be different reasons to build a nest-egg, nevertheless, by adopting 3 basic principles you can build a substantial nest-egg: plan your investments to make your money work hard as you did, increase your savings and maximise your investment and savings period.