That's not a good example of DCA. It is more like a lump sum investment, but split into 3 purchases at a monthly interval.

The regular puchase strategy, I often mentioned, should be:
1. Don't save and build up a lump sum.
2. Save and invest as you earn.
3. Buy equity fund with the spare savings you have for long term savings.

==============

- Strickly no timing at all. You don't wait, and wait, and wait for the market to fall, while your earnings and savings are gathering dust while waiting for the right time to begin your investment.

- You may try to wait and select the better day when all the market indices are falling to put in your regular purchase. But don't wait months to do so. Should pull the trigger within 7 days, since you have a job and income, and money is rolling in every month.

- Don't let the regular savings accumulate. Then you could put yourself into difficulaty of pulling the trigger to make a purchase; since the amount to invest is now bigger...

- Remember that the IRR (the effective rate of returns) actually begins the moment you get your salary. If you put the extra savings into FD for months or years before withdrawing it and investing it into UT... the IRR will take on the characteristic of the FD and it will take a much longer time for the UT fund to pull up the IRR.

(Furthermore, you are wasting time and being less efficient on investing your money... and missing the compounding growth on the UT fund.)

- Take on more risk when you (the investor) have the time to do so.

==============

In a post a few pages back, I wasted some minutes and data download reading that poorly written article on the so-call myth of youths taking on more risks than necessary... which try to muddle up things even more, trying to create more confusion on the uninitiated reader and then in the last para, recommended the reader to invest into "managed portfolios".

If not mistaken, the minimal entry levels:
Managed portfolios = 10k
UT fund = 1k
RSP (regular savings plan) = 0.1k

- Don't waste time and wait and wait to time your entry.

Here are some brief pointers to think about:

1. I would get out of an investment if there is possibility that the investment will fail. I would also diversify and spread the invested money into different financial tools if I am not sure which financial tool gives the better returns.

But if I knew that financial tool A is the best tool and I am satisfy in having only this financial tool, it is plain silly to diversify just for the sake of diversifying and having several financial tools.

2. EPF can be regarded as a unit trust company. It is the biggest and with nearly 700 billion in assets and investments. If it can fail, so can other smaller fund companies. And other financial institutions such as banks won’t be safe too. Then, the only safe place to put your money would be under your bed.

3. Both bond and equity funds don’t have any guarantee that its performance is the same every year. Bond funds too can have negative growth just like equity funds. Past years performance are history, it can be used to project and extrapolate the performance in the next few years but it is indication, not a guarantee the extrapolation will be true.

4. Don’t look at the dividends or distributions of any fund without noting its total returns for the year. The total return is more important. A fund may distribute more than its annual growth. Say, it started at 104%, and in a year’s time, gained 4%... the income distribution can be 6%, and its net asset value after distribution is 102%.

5. BTW if the fund is under EPF, the distribution option is re-invested.

6. As said in the previous reply, stick to the original investment strategy. If the plan was good (which is to complement EPF’s investment and diversify some money into a non-local fund ie. Greater China or Asia Pacific), and the selected fund was chosen carefully… when the market had deteriorated, it is not reasonable to abandon the fund and buy something else.

7. When the market had deteriorated, it is the right time to investment even more… since the investment is not for the next week or month, but years in the future. (Aside from DCA, there is VA. Google it.)

8. If there was an intention to have a certain invested amount and allocation in region A, region B, etc… don’t let “current market condition” or “market noise” determines the purchases. If you got cold feet at the ‘unfavourable’ region and jumps to the ‘favourable’ region currently giving positive growth, you are doing it wrong.

9. EPF dividend is as good as any bond funds, and without any added risk. If you think you have enough money in equity funds, an alternate option is do nothing and don’t withdraw out of EPF for bond funds. No point in taking more risk without having any higher potential returns.

10. It is possible to park temporary the withdrawn money in a bond or money-market fund, and later switch to an equity fund. Usually the funds must be within the same fund company. Try to seek and confirm the details.

(See also yesterday's replies in previous page.)

1. 50/50. Or toss a coin. If from different fund companies, stick to your preferred fund company.

2. Fixed-price fund is as good as, if not better than, bond fund. Yes, they are 'dividend' and represent its annual growth.

3. Not if you define DCA as spreading the purchases through out the entire investement duration. Don't mistake lump sum investment when splitted several times as DCA.

4. Both the funds switched to and switched from must be EPF approved funds under the EPF-UT scheme. If cannot park temporary, then withdraw every 3 months... also it is not a must to withdraw the max allowable amount if it is not necessary to do so.


This post has been edited by j.passing.by: Jun 22 2018, 05:33 PM

- Google 'managed portfolios' or check the FSM website.

- It is the minimal amount to start a fund. RM1000 to start a UT fund, RM10,000 to start a managed port, RM100 for RSP.

================

Regarding "opportunity cost"....

Opportunity cost existed when there are more than one chose to select. Let’s say there are 2 different machines to choose… they have different prices, different speed and performance, different maintenance cost, etc. If we choose on the prices and cost of maintenance to keep the overall cost low, and forego the machine with the higher speed, we could be forgoing the opportunity cost of productivity and may be missing some extra sales when there are higher orders in near future.

When there is only one chose or option, there is no opportunity cost to speak of. It is redundant and a waste of time to say we should have done this or done that or taken another option instead.

For example, if someone does not know or heard of UT funds, and kept his money in FD. There is no opportunity cost in not investing money (or in other words, un-invested funds) in UT funds.

If that person was presented with options to put his money into FD or UT funds, only then there is opportunity cost in making the decision to select which option.

Now, let’s move back to the previous post on not wait and wait for the right time to invest, but instead invest as soon as possible when there is spare money to invest, and not let the savings to accumulate too much.

If you already knew about UT funds (and been hanging out in this thread for sometime) and lucky enough to know about UT funds before there too much “un-invested” money sitting around and have already practiced ‘work – earned – savings – invest’ regularly, there is either no opportunity cost or lesser opportunity cost of “un-invested funds”.

If UT funds was never an option, either because you never heard of it or you now suddenly inherited a large sum of money or you had just withdrawn a large sum of money out of EPF at age 50, 55 or 60… there is NO opportunity cost to speak of in the “un-invested fund” if you now decided to spread out the purchases and slowly invest it bit by bit.

Spreading out the purchases over a long period of time would miss out ‘compounding growth’ in a market uptrend. If you are a new investor and a bit nervous on handling a big sum of money, spreading out and invest it bit by bit will take away any stress and nervousness in the investment and continuing the investment.

How much to invest at each purchase? It is up to each individual and how comfortable he is with the sum of money to invest each time. (Some are more kiasi, some are more kiasu... )

I would suggest not to follow your heart and emotion, but to use a bit of maths and common sense.

Let’s say you somehow realized you have or inherited a large sum of money, and now have 60k in your hands. You wish to keep and invest it into UT funds for 5 years before touching it.

Total amount to achieve: 60,000
Investment duration: 60 months
Investment budget each month: 1,000.

Instead of letting the 60k to gather dust while you DCA the purchases, you could put it into a money-market fund and switch out 1k into the selected UT fund each month.

For this short duration of 5 years and the targeted amount to achieve is also known, you could use VA strategy instead of DCA.

Note: Whether you readily have the whole 60k at hand or the investment budget is out of your monthly salary, the above DCA/VA investment strategy works the same.

========

PS. If you have just joined the work force, investing into UT would be easy if you don’t let the un-invested money accumulate too much. It is a bit more headache for those middle age guys with accumulated savings and un-invested money.

Are they really running out of time to slowly invest? Or are they feeling pressured to invest the entire large sum of un-invested money as soon as possible?

Fund agent: “Don’t know what to do? Come, come, let me show you managed portfolio.”

Last week was bad... maybe the baddest week... port last 2.6%.
And yesterday, another bad day... down 0.9%.

This month could be worse than March.

Looking back at your posts and conversations, may I ask what's your saving or investment plan? Seems to me, you are confusing DCA with whatever investment plan you had in mind.

A true DCA saving/investment plan is a plan that ignores the market sentiment. No matter how the market is - whether on a downtrend or uptrend, performing well last month or not, losing money last week or not, the plan sets the emotions aside... and regularly make the purchases (or "top up" which is the more popular phrase in this forum) in almost the same amount everytime.

And no, it is not DCA if the investor splits the lump sum investment to cover several months of the market trend. As you have known, since you started your UT investment last year, the market trend was up for nearly a year. The market trend could be continuously going down for a year or more. It could also have hit the bottom last week, and is currently performing a U-turn for the next 6 months.

So which direction will the market goes in the next 6 months? Your opinion is as good as any "experts" out there. We decide, we take the risk... after all it is our money.

Some like to speculate, as the returns will be better and bigger if they get it right. Some don't know how to speculate and don't want to speculate... this is where having a DCA plan helps to keep a steady investment in their UT funds or portfolio.

And more importantly, the steady regular DCA purchases helps to grow the savings. Otherwise how would he/she builds a retirement fund of several hundreds thousand or a couple of millions to generate a passive retirement income?

So it really boils down to what is the financial objective. Before setting a plan to reach the objective, the objective must be clear and defined first.

Cheers.

=========

Last week was another bad week... like 2 or 3 bads weeks in a row... but yesterday.s market performance plus today's could easily erase last week's losses. Too much TV watching world cup... missed the opportunity to switch more to equities... but then again portfolio is at 90% equity...



This post has been edited by j.passing.by: Jul 10 2018, 02:58 PM

Topping uo just means buying more. It does not necessary means it is DCA which is a plan which has regular purchases scheduled in.

Buying more units could also be due to market timing.

Topping up lesser when the market is up (and inversly more when the market is down) could either be a modified DCA plan - such as VA plan, which is also a scheduled plan. If there is no schedule and ad hod, it is market timing or trading.


No, I don't think it is spoken too much in this forum when people think it is fine to use DCA to mean whatever they think it means, as it is very confusing when everyone do that.

From what I read so far, some posters here - if not most - are market timers or traders.

Please don't get me wrong... there's nothing wrong being a market timer, and though I would advocate DCA to those just starting to invest in UT funds, it is not a must.

Personally speaking, I don't bash market timers. They are very welcome to share their timing tips. Or if they are asking for timing tips, they don't have to be coy and beat around the bush saying their ports are currently in red and asking whether to do this or that. Which would inadvertenly result a reply of "Don't know what to do? Try doing it slow and steady using a DCA plan."

===========

Lastly, Market Timing is very different from DCA. DCA is a regular purchse plan, and as in any plan, the purchase amount or purhase budget is predetermined. Market timing is ad hoc and a response to market sentiments, the purchase amount/budget to spend is not fixed, it can be anything from zero upwards (and also negative amount - as in selling).

Continuous market timing does not mean it is sort of a DCA plan... it is market or perfomance chasing.

This post has been edited by j.passing.by: Jul 11 2018, 03:22 PM

Jack Ma says the trade tarrif will be there for the next 20 years...

Nothing new... it is business as usual. The world will move on and consumers will keep on consuming, exporters will keep on exporting, importers will keep on importing. Purchasing orders still have to be placed months in advance, shipments will still be on FOB basis, importers just pay higher duties and passed onto the consumers.

The world moves on.

H-shares jumps more than 2% today.

"Middle term, a lot of Chinese business will move to other countries," he added.

https://www.cnbc.com/2018/09/18/alibabas-ja...t-20-years.html

Above was what I posted in April when Malaysia pride itself of having a stable goverment alike Singapore and unlike the other neighbouring countries in the region.

My humble opinion and my 2 cents. Investors have to be cautious in selecting long term investments. Goverment policies can easily be changed with a stroke of a pen.

Policies can be reviewed. They can be changed if they are found lacking or if its orignial intention has been achieved.

What you really mean to ask is essentially when is the right time to time the market. Because DCA is a regular purchasing strategy at a fixed and constant amount at each purchase.

If the amount varies at each purchase, then it is a VA (Value Averaging) purchasing strategy.

Or if you mean to ask when the investor should begin his first purchase and starts his regular purchasing strategy, then the easy answer is when he has any spare money available to invest.

Meaning to say, the investor wants to begin to invest into equity funds and starts building up his investment slowly and conservative manner with small amounts at each purchases. He has reduced the investment risk with small purchases each time.

In the first place, the investor uses a regular purchasing strategy because he knows equity funds is not fixed at a certain price and can varies and fluctuates up and down daily and there will be either gains or lost each month, thus he spreads out his purchases in small amounts at each purchase each month instead of making a single lump sum purchase.

Or he can use a sort of a VA strategy and buys the dips. So, each time an index drops a few percentages from its record peak or its monthly peak, he makes a purchase in a variable amount accordingly to the drop and his investment schedule.

Looking from personal finance management viewpoint, the investor had set aside a portion of his monthly salary to invest into equity funds and taking on some risk on this spare investment money.

No risk, no gain. Since it is spare money to invest and make more money, it is better to ‘go big, or go home’.

Please don’t take the ‘go big’ wrongly to mean “bigger or higher purchasing amounts”. It means to take on more risk and take on more aggressive equity funds for more aggressive returns.

But then again, there are market timers using the hit-and-run method. They are more willing to wait for the right time to go all out and bet big.

Among the market timers are also those pretenders claiming to be market gurus who know how to time the market. Also among the market timers are the non-starters.

These non-starters are in 2 groups.

The first group can’t afford to make regular purchases because they are not earning enough or living beyond their salaries and don’t have monthly savings.

The 2nd group are those who cannot bear to take any risk with their spare investment money.
They can’t bear to see any lost – no matter how small the lost is. Each ringgit lost would be painful because to them, like my grandpa used to say, each cent is as big as a bullock cart wheel.

Cheers.

This post has been edited by j.passing.by: Oct 19 2018, 11:14 AM

Maybe the above post was lost in yesterday's heavy traffic, so reposted again...

I have given up engaging with meaningless dialogues and debates just for the sake of prolonging the debate. It is a waste of time and bring no benefit to anyone, to both the posters and readers. Hopefully, others could do the same.

Please note I'm not trying to shut up another person with a different opinion from mine. It is not a matter of opinions. It is not a matter of different investment strategies or methods.

It is about engaging with individuals who my grandpa would call "pun tong shi".

That is in Cantonese. It translates to half a bucket of shit.

It is a Chinese phrase and it means that the person has only partial knowledge, yet trying to be too clever or smart

I am keeping in mind too that this is an open forum, and differences in opinions should be welcomed.

But some opinions can be quite toxic instead of being helpful.

If there are any silent readers who have just started his/her investing into ut funds recently this year or last year, hopefully this forum and the posts here have given you some help and support.

As for those toxic posts boasting of waiting for the right time to enter and begin investing into ut funds, just ignore them.

They are of no use to you except to make you feel that you have made a mistake and encourage you to pull out at a lost.

Thank you for reading this long post. Hopefully it is helpful to you.

This post has been edited by j.passing.by: Oct 20 2018, 07:48 PM

The total return looks good... try calculate the effective rate of return...

Using online calculators is okay as long as we get the point that the more correct way of gauging an investment is its effective rate of return, not the total return.

Whether the returns are satisfying or not, it is up to each individual and what he is comparing with. For many years the FD rate was less than 3%, only in recent months it was above 3% and close to 4%.

I think this is known as an intuitive bug. You have to be login for the edit button to appear along side with the quote and reply buttons.

To be more intuitively, no selection buttons should appear when not login.

"each post" meaning every posts or only your post?

Needless to say, the edit button won't appear at every posts since you are not allow to edit someone else's post except your own.

It is a strange rule... seems more like an unintended system bug to me.

Thank you for taking your time to write and share your thoughts.

It is well written, and I do hope everyone, including yourself, re-read it from time to time to remind ourselves that “You can't compare your investment objective with others.” Different objectives call for different portfolio allocations, different age groups will have different expenditures and savings, etc. etc.

So, try not to put numbers into general statements such as “And with an amount as large as 50-100k. Diversify!” If the retirement plan is several millions or more and has another 30-40 years to go, this sum is puny and could be perfectly fine to be all in equities or in the same sector.

And don’t be too quick to compare others with yourself and make judgements too easily and quickly.

The writing (on another post) on the young teenager driving a Mercedes-Benz sounded like you knows better. For all we know, his parents are billionaires drawing tens of millions per annum and can afford to buy a new one every week. He driving last year’s car is already very thrifty!

Lastly, don’t get drawn too much into this forum and spend too much time on one-to-one chit chat on resolving someone else’s problem or investment dilemma.

Even if you knew their net worth and net income, it does not complete the whole picture. A civil servant with a pension will look at monthly savings and long term investments very differently than a freelance self-employed person. The self-employed person without EPF contributions will have different investment plans from an employed person with EPF.

It should also be noted that an employee with EPF can have different monthly contributions. The employer’s contribution can ranged from 12% to 19% of the gross wages. The 7% spread is vast, and will make a vast different in the long term investment for retirement.

You are talking about a portfolio of stocks?

Isn't the standard advice is long term investment, DCA, and having a matching portfolio of mutual funds to the investor's financial objectives?

Hence, the portfolio is always ready and prepare...

Why not select based on the better performance fund among its peers?

If based solely on price and its lowest point, how to be sure it is not simply a bad fund that performed poorly when the market is down and yet when the market is going up, it does not rebound higher than its market or benchmark index.

Take note that mutual funds are "actively managed" and consists of a pool of stocks selected by the fund manager.

The same stocks or the volume held in the stocks may not be the same all the time. So how can we know whether the selected pool of stocks is the "best value" to buy at any particular time?

If you want to time the market and choose to buy when the market index is at a certain level, it is still ideal to select and buy the better, if not the best, performing fund among its peers based on past performances.

So what have you done lately?

Equities already hitting 12% or more since Jan. Some bond & sukuk funds doing great this year from Jan to June, and already hit 5% to 6% ytd gains.

If the portfolio is 90% on equites and switch to 10% equities to lock in the YTD gains, the portfolio is projected to gain at least 18% by year-end.

========

BTW the above is on a 'matured' portfolio with very little or no fresh money going into it any more. Play play and bet here and there to make some extra gains for the year.