Unit trusts: A pathway to financial growth
Investments and savings are key to economic stability and financial security. Unit trusts offer one of the easiest investment solutions, ensuring long-term wealth accumulation and inflation protection. With Namibia’s inflation rate peaking at 7.3% in August 2022 but dropping to 3.2% in January 2025, unit trusts provide a hedge, preserving purchasing power and fostering economic stability.Unit trusts originated in the UK in 1868 with the Foreign and Colonial Government Trust, offering diversified market exposure while reducing risk. Today, they remain popular due to professional management and flexibility, enabling disciplined savers to benefit from compound interest and exponential growth.
According to the Bank of Namibia’s 2024 Financial Stability Report, household debt stood at 40.5% of disposable income in 2023. This level of indebtedness is unsustainable, highlighting the need for a savings and investment culture. Increased unit trust participation can alleviate debt burdens, enhance disposable income, and drive productivity-based economic growth.
For Namibians, unit trusts are an accessible and affordable wealth creation tool, overcoming financial constraints such as inflation, currency fluctuations, and limited financial product access.
Diversification
Funds like the Old Mutual Money Market Fund allow ordinary Namibians to invest in professionally managed, diversified securities tailored to different risk profiles and investment horizons.
Unlike traditional bank deposits, unit trusts serve as an inflation hedge. While money in low-interest savings accounts loses value over time, unit trusts often yield returns exceeding inflation, preserving and growing purchasing power.
Economic development depends on domestic savings and investment. Higher savings levels fuel capital accumulation, enabling infrastructure expansion, business growth, and job creation. By investing in unit trusts, Namibians can support local enterprises, reduce foreign dependence, and foster economic stability.
A key advantage of unit trusts is their ability to build generational wealth. By leveraging compound interest, long-term investors can create lasting financial security. Parents investing for their children instill financial literacy and ensure intergenerational stability.
Unit trust savings protect against inflation and drive national economic progress. By fostering a disciplined savings culture, Namibians can achieve financial security while contributing to sustainable economic growth, securing prosperity for future generations.
* Tumelo Thudinyane is a Portfolio Manager at the Old Mutual Namibia Investment Group.
** Opinion pieces and letters by the public do not necessarily reflect the opinion of the editorial team. The editors reserve the right to abridge original texts. All newspapers of Network Media Hub adhere to the Code of Ethics for Namibian Media, a code established jointly with the Media Ombudsman.