But when comparing etf returns to another fund returns , the management fees has already been considered. The returns are net.

This post has been edited by Drian: Jul 2 2017, 03:58 PM

The best way to invest in UT is dollar cost averaging. It works with all type of funds. Guaranteed gain over time. Most ppl loss money in UT because they invest in one lump sum. Time the market is a fools game, even foolish for UT. Its also not recomend to hold too many funds as single fund has enough diversification. Less fund is easier for cost dollar averaging.

This post has been edited by Singh_Kalan: Nov 17 2017, 09:13 AM

"Most ppl loss money in UT because they invest in one lump sum"...not 100% correct....(read the attachment for a sample of collected data for a certain 10 year period)

Neither Is 'Better' Than The Other
In all fairness, nobody can say for certain whether Lump Sum Investment (LSI) or DCA is the better investment method. The reason is that adopting both methods in a different period would give different results depending on the prevailing market conditions.
For example, if you made a lump sum investment right when the FBM KLCI bottomed out in end March 2009, there's no way that the DCA method could give you better annualised returns.

DCA Takes Care Of The Timing and takes away the emotional hesitation.....
By providing a disciplined approach that ensures that you buy more when it's cheap and less when it's expensive, DCA ensures that you do not need to worry about catching the market's high or low points. I'm not really big on investors timing the market, unless they have a crystal ball.

When the markets are going up, you still profit by using DCA, albeit to a lesser extent compared to LSI. When they're headed down, you're better off than lump sum investors. Either way, you do not lose out by starting your Regular Investment Plan....just do the regularly for a potential better retirement.



This post has been edited by T231H: Nov 17 2017, 09:27 AM


Attached thumbnail(s)

When you invest in a lump sum, RM36k is locked for 10 years, whereas with dollar cost averaging, you only invest a fixed amount of RM300 every month over 10 years.
For the sake of fair comparison, the rest of the money for DCA should be put in a risk free investment (eg FD) while waiting to be invested on UT.
So..the chart doesn't provide a fair comparison and its abit misleading.

This post has been edited by Singh_Kalan: Nov 18 2017, 12:48 AM

just add up the cumulative interest earned at 3%pa then add up to see if the sum is more than stated in the LSI?
That charts shows a different of Rm 30k....can the FD interest gives RM 30k?
With the monthly moving of money away from FD.....i agar agar calculate that the interest gained can achieve less than RM10k

This post has been edited by MUM: Nov 18 2017, 01:11 AM

Actually with the FD interest (assuming at 3.2%) invested back into UT monthly DCA, you can afford to invest RM350 instead of RM300 per month. That will make a lot of different over 10 years. But still I think LSI will always have a better return in an up trend. Things is you will never know whether you are at the peak or the bottom until its too late.

so that article is not misleading then?....
If i am not wrong...that article had been in the public domain for many many years already....and if it can be so easily found to be misleading then i think that author would hv corrected it.

I think t231h posted that to said that what you had said abt lsi lose money......is not 100% correct


This post has been edited by MUM: Nov 18 2017, 01:59 AM

The chart and explanation doesnt provide fair comparison thus is misleading. Its not about LSI outperformed DCA.

I didnt say all...i said most, thus its not 100%

This post has been edited by Singh_Kalan: Nov 18 2017, 02:21 AM

That chart did shows lsi out performed dca wor.
i guess that is why he said ...not 100% correct

btw, you mentioned something like
"The best way to invest in UT is dollar cost  averaging........Most ppl loss money in UT because they invest in one lump sum."
.........what does it imply?

This post has been edited by MUM: Nov 18 2017, 09:01 AM

I seem to remember that LSI is better and did a quick Google search: https://investor.vanguard.com/investing/onl...invest-lump-sum.

I LSI when I can. I DCA out of my paycheck.

Using the chart to prove that LSI is better than DCA is very misleading and contain serious flaw in real world example.
1. Unfair comparison in term of performance as explained in my earlier post.
2. There are thousand of other funds out there that performed differently from FBM KLCI.
3. In real world, when we talk about LSI over a period of 10 years (that is a very long time), we are talking about a few lump sum investment. A normal working adult will not have that much sum of money to invest in one go unless he hit a lottery or inheritance which is rare.

Example of a real world Lump sump investment of RM 36k over 10 year
Year 0 - RM 6k
Year 2 - RM 8k
Year 4 - RM 6k
Year 6 - RM 6k
Year 8 - RM 5k
Year 9 - RM 5k

This is a real world case using LSI over 10 year period. The result will be very much different from the chart.

Comparing LSI to DCA using one lump sum investment from start over a period of 10 year is very smart but its misleading.
I believed most UT consultant would like you to invest in one lump sum so that they can earned the commission earlier.

This post has been edited by MUM: Nov 18 2017, 12:32 PM

I do not say that DCA will outperformed LSI over 10 years time, it all depends on the timing and type of funds. Do not based all your assumption on the past result of a single fund. Bear in mind there are thousand of funds out there that performed differently.

With the same fund (eg FMB KLCI), I can choose a different period of historical 10 year (eg Jan 1997 - Jan 2007) duration that proof DCA can outperformed LSI by a wide margin. But that is not the point cause I m not comparing the performance of which method used. I just say those that loss money in UT most likely invest in one lump sum. There are those that profited from LSI, I m not referring to those group of investor.

The way LSI is being illustrated (with initial one lump investment for the whole 10 year) in the chart is flaw & misleading. Majority of LSI investor won't invest that way. Instead they will invest few lump sum over 10 years period. Do you agree with me ??

I m not going to comment on those report by Vanguard and others UT provider.. I believe its biased and does not tell the whole story.

Most UT consultant/company prefer lump sum commission instead of small commission over time. That is their motivation to promote LSI.

This post has been edited by Singh_Kalan: Nov 18 2017, 03:39 PM

ok...point noted...

"I just say those that loss money in UT most likely invest in one lump sum. There are those that profited from LSI, I m not referring to those group of investor."
VS
"The best way to invest in UT is dollar cost  averaging........Most ppl loss money in UT because they invest in one lump sum."

Lump sum VS DCA investing

There's no need for agreement or belief. Just based on statistics and situation kua.

eg.
1. Inheritance / Windfall - long term (>10=years) holding with re-balancing:
Lump Sum in to a few asset categories & within each asset category, diversify
BEATS
put in FD and slowly DCA into the same assets
BUT
short-term, good luck in ignoring the gyrations - ini human punya pasal, not markets nor vehicles .

2. Working stiff, making $ to survive, saving & investing for long term
where got lump sum to invest unless significant sudden bonus/commission? ie. in comparison to the sum saved monthly for investing. Thus DCA win liao lor

Thus, investing like martial arts - no such thing as BEST EVER kung-fu for ALL situations.

This post has been edited by wongmunkeong: Nov 19 2017, 10:56 AM

I choose buy and hold cz it is impossible to time the market. So I never try.

after you had bought and held.....no change to the funds held even if it is bad for a long period of time?
cos if you do, then it will also sort of doing the timing thing....

Both works. You need to find your own style.

And afer reading the linked article and not fully understand it, is of no benefit to us either... same as not doing any reading or research; and the understanging or knowledge can even be worse from the misunderstanding, and we now believe in the wrong info.

I think the misunderstanding comes about due to English not being our native language.

Or maybe because some of the words and phrases used are technical terms in the financial world, and they are well-defined, yet non-financial people were using them as if they are plain English words without knowing their true definition. As like a non computer-geek who is not clear between a computer bug and a virus.

===========

1. Market Timing vs Buy and Hold
Since the first matter is 'market timing', we could take ''Buy-and-hold' as making any investment base on any factors other than market outlook. So, in this case, to have a meaningful discussion, we can take that 'buy-and-hold' as NOT "buy-and-sell'.

Thus, in other words, "market timing" is "buy-and-sell". When we are doing buying-and-selling on a regular and multiple times, then we are doing 'trading'.

"Trading" is usually a short term investment. In stocks, day-traders would closed their trades before the exchange closes, thus holding nothing at the end of day. While in unit trusts, it is usually longer than a day (due to forward pricing, and its buying and selling processes. Whether it is days or weeks, it depends on the investor's outlook or forecast on the market.

Thus whether to practise market timing or not, or whether is market timing is more beneficial, it will depend on how good is the market forecast to enter the market at the right moment, and also to exit the market at the right moment. To have any advantage, both the entry and exit must be at the right moments.

(Getting the 'right moments' is not as difficult as it sounds. The entry and exit could be anywhere about the bottom and the peak...)

"Buy-and-hold" is usually a longer term investment.

One can do a single buy-and-hold investment for a longer term investment objective. One can also do it in multiple entries or purchases. For this purpose of comparing it against "market timing', we take it to be mutiple entries.

So, what differentitate buy-and-hold from market timing is that it is mutiple entries without any exits. In other words, multiple purchases without any selling.

In short, in a multiple events:
Market timing ---> buy-and-sell, buy-and-sell, buy-and-sell,... equivalent to 'trading".
Buy-and-hold ---> buy, buy, buy....

Which is better? Depends on how good you can time and trade the investment. Period.

(It is not necessary to resort to statistics to support which side is better... as there are hundreds and thousands of past statistics or past events that can be used to show which side is better.)

==========

2. Lump sum investment vs DCA.

This is the same or almost the same as above 'Market Timing vs Buy-and-Hold" discussion.

Lump sum is actually a financial jargon, and it means a single investment. Just like when it is used in paying off a loan, a lump sum loan settlement means paying off the loan in a single payment.

Somehow, it was misread as a BIG sum of money.

So, back to the above statement "I LSI when I can. I DCA out of my paycheck."

If you re-read the short article you have linked to. "How to invest a lump sum of money"... with 'lump-sum investment' as a single investment... you will get a better understanding of its last line "Our research indicates that it's prudent to invest a lump sum immediately."

The keyword is "immediately".

Also understand that the article is from a financial advisor, who was expecting you to approach him or any other qualified financial advisor for any further financial advice.

A financial advisor who is qualified enough to show and pursuade you how to invest the windfall when you "supposed you received a windfall". (A windfall is like hitting the Toto jackpot - which is most likely a once-in-a-lifetime event, unless you are very lucky to hit it twice!)

He would, of course, not show you and try to convince you with only one fund or one type of investment. It would be a whole gamut of bond funds, income funds, equtiy funds, etc etc to balance the risks on the expected return from the entire portfolio of funds.

Hence, generally, it is true that ""Our research indicates that it's prudent to invest a lump sum immediately".

Just as it is generraly true that it is advisable to invest immediately as and when we have any extra savings from our monthly salaries. It can be a waste of time by delaying the purchases - whether it is savings from our salaries or from any windfall.

In short, "I LSI when I can. I DCA out of my paycheck." can be corrected to "I should invest my money whenever it is possible to do so, and as soon as possible."