Well, for me DCA is not worth it, but I will let you decide with the pro and cons ...

Pros
1. Continuous investment regardless of market sentiment - no emotions
2. Lets you average out your investments, so you will get at least get equivalent to fund performance
3. Automated process (if you can consider this one a pro...)

Cons
1. Your agent will get monthly commissions (like steady salary to him )
2. Tend to have average or below average performance over investment lifetime after minus the fees
3. Not able to take opportunity when the market is having a massive discount
4. Not able to cash out when the market is way over priced
5. Not able to re-align your asset allocation mix to market sentiments
6. Blindly invest in a fund, no matter how the fund perform, once you DCA, you tend not to monitor it anymore. So if the fund performs poorly, you will not realize it until very late. 80% of the funds perform below benchmarks over the long term.

Well you decide then.

Thanks for your reply.

First and foremost, I have registered as a new UTC. Therefore, commisions will go under me. This DCA is recommended by my upline. He has showed me his clients progress using this DCA and they have fairly gain some +ve returns over a minimun of 5 years. Therefore, I was quite intrigued by it.

Let me also tell you my situation. I'm 23 this year and very new in investment. If I would invest, this would be my first ever lifetime investment. Therefore, I don't have the knowledge as you all do in homeworks and research. Furthermore, I'm still a student and don't have a passive income. Thus I won't invest much as well. I would love to take this platform to build more confidence in myself and gain more knowledge. Thus is this DCA suitable for me?

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i invest in other things rather than this mutual fund

you know one day my photographer friend out of the blue introduce me to this and i was totally amazed with the "high returns", when i checked with charts, now only i get it, he got in during the 08 and 09 period, u simply poke whatever share in KLSE also gain a lot lah coz the average price went down around 40%

guys, pls do your research on what other structures of investment available in the market and WHY you should and should not invest in these schemes.

if you do not do as above, then please you can forget about investing totally because you'll be the suckers in the long run, if you bought a few condo and rent it out, probably the return will be so much higher than 6% or more and your property will appreciate in the long run

Golden Rule of Investment that i have learned is :
1. Facing Uncertainty + Market Cycle (who can predict the future ? nobody)
2. Risk : Reward ratio (how long to win %, when lose, lose how many % ??)
3. Fees (all the charges that will slowly eat up your profits)
4. Industry Structure (are your "managers" working for you, or he's sleeping ?? does he have experience ? )
5. Definition of Safe (under what conditions will screw you up ?)
6. Market conditions that you'll be investing in


Structure is how you know whether this investment will give you good returns or burn ur a$$

Hedge Fund (George Soros) charges 2% annually, with annual return of around 8% and above, if his returns falls too low, all their investors will move out their money from the company and thus the company cannot survive. These hedge funds investors are those super rich people with millions to billions to pension funds and such. What is more important here is the structure, because you are paying the managers based on "true performance" rather than on fixed income basis. It's all about profit sharing basis which means that the managers will have to work hard for you if they want to get their bonuses.

http://en.wikipedia.org/wiki/Hedge_fund

i put it in a more simple manner, if you take this investment as your business, will you want the person that handles your money to be on profit sharing basis(he'll fight for you if he wants a chunk of the returns) or just salary basis(he does nothing also get paid), from what i know is that the salesman gets a very big chunk of cash for pulling in customers rather than to manage, thats why so many people joined.

ps : unit trust, mutual fund or what also has been in the market for long long time already, if not mistaken, 20years ago my mum also dumped in money, made some money in the beginning and during the crash, lost until now also cannot recover coz some of the companies disappeared during the crisis.

This post has been edited by AllnGap: Jul 16 2010, 08:29 AM

which unit trust/mutual funds company or what.. "companies disappeared during the crisis" ?? care to share..

cause im curious which company that do unit trust/mutual fund manage to chap lap

what i mean is that the companies in the share market disappear during the crisis, so if you average out for so many years, actually you're in the loss, rather in profit.

those who does not do research always fall into "suckers" category, making people like warren buffet or bankers richer than ever

HLG has close 2 fund Dana Munir, Euro Dividend Growth end of June 2010.

Closed funds is not the same as 'bankrupt', funds close all the time. Once the fund close, they will refund you shares according to the NAV. You don;t lose all of your money.

Dear all, I need some advise from taiko's here

I am sure some remember my dad's predicament in PM where it is a negative return after 2-3 years time frame, Just check with PMO and there is like around 100k unit distributed into 6 funds. Is it wise to stick to it hoping it averages out or cut short and throw back into EPF?

This are my thoughts regarding DCA:

i) DCA is not a strategy to maximize or guarantee profit; it is a strategy to minimize volatility esp for passive investors.

ii) DCA is not the only strategy to use for financial planning but many UTCs harp on DCA making it as though it is the end all and be all of financial planning.

iii) For passive investor, use asset allocation whilst utilizing DCA as the entry strategy is doubly more effective. It was explain to me during my CFP class. Some research done in the US previously. I do not have the actual paper, it was mentioned "in-passe" by the lecturer.

iv) Recently I read in a personal finance journal , the next in-thing about personal investing is called value-investing. This is basically a re-branding of the "buy a lot at trough; buy less at peak" strategy.

Xuzen

DCA is not rubbish as said.

1. We cannot time the market, we can only predict. Most UT products invest into stocks market, voilatility is there.
2. My strategy for DCA - when market is blooming, I stopped DCA or invest less. When market is down, I do DCA.
3. Everyone has got their own investment strategy. Remember, buy low sell high. Do figure it out.

What you are doing is not DCA, DCA calls for EQUAL investment no matter the market is up or down.

I feel that each and everyone of you have their own method and perception in DCA and investing. But for me as a newbie, I will try out DCA as my 1st asset in my life.

Then, it is not DCA.

My view.
I don't like DCA mainly due to the fact it only benefit agent only. aka like what gark had said stready income for them only.
Don't purely look at data, performance given or published by the UT company or brokers alone. Some poor performance data may brushed aside or not even mentioning when introducing you about UT or DCA.
We need to assess across, in fact, the most important is to look at the past data those poor performing fund one. Simply look at the several best fund as supporting factor to buy UT is never a good practice.
Don't get me wrong, I am not saying UT not good.
Just personally view that a rigid DCA is never a good strategy.

Investment shouldn't be too rigid to start with.
Although we cannot time the market, common sense tell us after market had surged 50% to 100% over last year, market unlikely able to repeat last year performance again (although we cannot rule out 100%, but the chance is remote).

Don't merely look at some performance presented to you. Look across and assess more.
There are hundred of fund out there, anyone can pick a few the best to show you, but those poor one being set aside.
Which is a norm practice across, (not only UT but almost all investment field)

If you have no income and no passive income (I presumed as mentioned as student), DCA is furthermore not suitable.

In fact, you don't need to rush into it, can monitor how well the market or UT performance against market benchmark, or doing some simulation work, as for own assessment and research.
Money is yours, don't rely other words, and others presented data as guideline for investment. Understand your own is the most important factor to start with.

Thanks for you reply.

Currently I'm trying hard on researching on myself and trying to understand the quarterly fund review on my own. I'm not limiting myself to particular funds shown by my upline only but also opening my eyes on others as well.

About the DCA, I'm investing in a really small scale. To be preciese, the minimum amount as a start. My main aim is to gain experience myself. I want to put it a habit for myself to invest for my future monthly with my allowance. This is to train myself in the investing field from young before I graduate and venture into working life.

1. When you review funds, the best funds are those who falls the least during bad times and have a ever widening premium over benchmark, during good times any "capalang" funds also can make money. So the period when you are reviewing is very crucial. If you take 2009-2010 for your review, almost any rubbish fund also have good gains. Anyway don't look at quarterly results, look for at least 5 years worth of data and their holdings, turnover and fees.

2. If you want to learn investing, DCA is the worst place for you to start because then you will not learn anything at all. The best way to learn is to put your money at risk when you think it is a good time to invest and take it out when you think it is bad. DCA and averaging it out, you will not get any value out of it, because DCA is designed for those who could not care less about the market gyrations and valuation.

P/S if you are reviewing PM quaterly results, please beware those are bid-to-bid graphs, they have not minus out the fees yet.

PP/S what are the funds recommended by your upline?

This post has been edited by gark: Jul 19 2010, 12:41 PM

Thanks again for your professional advice.

1. Thanks for informing me bout the quarterly fund review mistake that i've made. Just a noob question, if the fund has been performing over the benchmark, meaning its performing well in those years?

2. I'm planning to start small. 1k to be exact which is the minimun value. (I'm still a student ). My upline has showed me most of his clients' statement on their invest using DCA. So far most of them are raking good returns. He told me it is a way to invest for my retirement plan later on and a wise choice especially if i start young. I do still believe this DCA suits me for now.

I understand that there is 5.5% service charge on every top ups for DCA. I'm well aware of that. Thanks for notifying again.

He did recommend me PRSF. But I'm looking at others as well.

Well since so many people have already given their opinions, if you still insist to DCA, that is your choice. Sometimes the benchmark is relative, so you need to compare it against it's peers as well. Look for higher annualized gains than peers and benchmark. PRSF is quite a good fund, but not the best out there.

Hi, I need some advices for my case:

I used my EPF to invest these 2 funds:

PISTF: Invested in 3/Apr/08, as at 21/7/10, earned 25.45% in 2 years+
PISSF: Invested in 1/Aug/08, as at 21/7/10, earned 32.96% in almost 2 years

The return is much better than EPF interest and exceeded my expected earning in interest. So, I'm thinking to park them somewhere to prevent my earning drops and thinking to switch them to these 2 funds again when the price drop in future. My question is Which Fund has less risk and allowed me to switch fund from EPF investment? Bond or money etc? Any idea?

I just applied online account & waiting them to send me the password, thinking to switch the fund myself online coz my agent friend is very sick now, just dun want to trouble her.

Any advise for me? Thanks.