Dollar Cost Averaging Vs Lump Sum investment

Hi viewers, I understand that you may have read some post from other bloggers or forums indicating on the topic that i would like to share with you guys. As far as concern, i would try to simplified the understanding of how investment works and from here, you would be able to get more ideas what your future personal banker or insurance agent would share with you. So i would just share two forms of investment and mode of payments to keep it short and sweet! It is also based on my own findings as well. But please bear in mind, your investment decision is solely on your own discretion. =)

Let me start by simplifying on the understanding of the two mode of payment: Dollar Cost Averaging & Lump Sum 

Dollar Cost Averaging

It seems to be popular among the young ones who do not have strong purchasing power or earnings. The purpose of this mode is to allow the investors to pump in a specific amount of money every month to the investment product. It also allows to appreciate the volatility of the price of the investment product. This mode of payment would come with a price. It normally charge a fee that is rather high.

Pros: 

1) Consistent purchase of the units every month.

2) Allows the investor to understand the product they purchase due to the volatility of the price every month.

3) May potentially break even.

4) Monthly minimum amount of $100.

5) Do not need constant monitoring.

Cons:

1) High fees.

2) Fixed date to purchase the units.

3) Monthly amount of atleast $400 and above to find it worthy on paying the fees(varies according to the person)

Lump Sum

Lump Sum has been the normal mode of payment. It is much in favor for those experience investors as it allows them to bid for the best price. This is of course requires the investor to have a better understanding on the movement of the price or the company nature of business

Pros: 

1) Able to purchase at your preferred price.

2) Fees are affordable based on the quantity of unit.

Cons:

1) More Monitoring required from the investor.

2) Requires a big sum of money.

Next! I will share with you two of the investment products that offers both mode of payment as it maybe lengthy for someone to read through everything if i were to add more products.=P

The two form of investment product would be: Unit Trust & Singapore Stocks

Singapore Stocks & ETF

Since January last year, SGX has decided to reduce the shares purchases from one lot(1000 shares) to 100 shares per transaction. It helps alot of new investors to enter the market and increase the current investor portfolio. Interestingly, two of the local banks have came out with an interesting approach to garner more young investor(inclusive myself) on investing through dollar cost averaging since 2013 even though there are private companies that offer similar service. The local banks are quite successful in their publicity in creating awareness on the importance of investing at the early age. It seems quite catchy for some people as the stocks or ETF that are offer are based on blue chip companies. Personally, i have use both banks service since the start of their launch. I choose to diversify not only my portfolio but also my mode of purchasing so that i would be able to appreciate on the various services given by companies. Purchasing stocks on a lump sum would require to open through their securities such as DBS Vickers, Maybank Kim Eng, OCBC Securities, Lim and Tan, POEMS and UOB Kay Hian. Each of the securities has its own promotion. Choose based on your comfortability and they will assign you with a remisier to assist you.

Unit Trust

I have used services from banks and online platform to purchase unit trust. I would not dictate any of the unit trust that i currently holding as it would definitely bring no benefits at all on my initial purpose of this blog. Unit trust is a portfolio of assets of a different risk level that cater to different appetite of investors. Personally, i would recommend you to approach by the professionals be it insurance agent or personal banker to perform the risk assessment test before you start any form of investment. I hear alot of horror stories of those who invested and could not swallow the risk of losing some of their money. It is strongly advisable to know your risk appetite. Always try to diversify your unit trust product and not stuck to one product throughout your investment. In my future post, i will share more details.

As promise to keep it short and hope it is simplified for you to understand. I will write more items from Initial Public Offering(IPO) stocks, insurance product and daily personal finance. Will also give some updates on interesting workshops.

So stay tune and have a good weekend!