Thank you, but .. I think investing in unit trust is more suitable for me than stocks ... I have no time (and interest) to respond to the changes in stock market ..
basically I have a fund under each equity category of FSM recommended fund except for islamic funds. for bond funds, I have RHB EMBF & ATF
.. After we login to FSM, there is a 'cost' which is referring to our investment amount, not only specifically referring to sales charge / GST.
Say for example, my initial investment for Fund A is RM 5,000.00. If the NAV dropped by 10% that month and my DCA is RM 100.00, the impact of this RM 100 additional will not significantly lower the weighted average cost. However, given the same situation, if the amount of DCA is RM 5,000.00, then the impact to weighted average cost will be significant.
Subsequently, if there is drop in the NAV by 10% again, the impact of DCA RM5,000 will make the weighted average cost even lower, on the other hand, if it hikes, it is also fine as I have benefited from the previous month's DCA of RM 5,000 which make the weighted average cost lower compare to if I have only DCA RM 100.
If the NAV hikes 10% after my initial investment, and continues to hike another 10% after the previous DCA, it will make the weighted average cost significantly higher too. The drawback is my cost of investment is higher, the good point is I have more units to enjoy the 10% compared to if I DCA RM 100. Sometimes, I find reluctant to redeem the units while maintaining the value similar to my cost even the targeted profit has been achieved as after redeeming the units of equal value to the targeted profit, the value of the remainder units could not be maintained as similar to my cost.
So I feel like DCA a greater amount is more secured ..
It's incorrect.
You only give the case of one top up. If you see the DCA as a sequence of tops up, that's different.
If you are topping up against a dropping price during your DCA period, then it would be better to top up less. Just very simple, if you top up more, the drops further, you lose even more !!!
If you are topping up against an increasing price during your DCA period, then it would be better to top up more.
Question is still whether do you exactly know it will be increasing or it will be decreasing. If you know that, then no need to DCA ! LOL.