26 Jun 2021
I already have 2 high savings account (singlife and jumpstart). I have also read up on ETFs and was thinking of starting off at RSSs or Roboadvisors. Where should I start? And should I be doing DCAs or lump sum?
Regarding DCA or lump sum, you should ask yourself if you're able to stomach the volatility of lump sum investing. As you put in a huge sum at this moment, the stock market might crash the very next day, and your portfolio will drop significantly. Would you be able to stomach this huge loss?
The thing about markets is that they will always go up, so if you leave your lump sum in the market for the long term, you would be able to see returns maybe in a few years time. However, if you can't stomach the short term volatility and are tempted to sell the moment your portfolio loses money, I highly recommend doing DCA instead.
Regarding robo vs RSS, it also depends on the amount that you want to put in each month.
If it is a small amount each month like $100, robos may be more cost effective as they do not charge any transaction fees and instead charge an annual management fee based on your assets under management.
If you are willing to invest around $250 a month, the FSMOne RSP may be more cost effective. This is because the transaction fee is the same regardless of the amount that you're putting in, so putting in a larger sum reduces the weightage of the transaction fee.
Another thing to consider is that robos usually buy into a basket of ETFs, while you will only be buying one ETF using a RSS. Robos also have some bond component in their portfolios based on the amount of risk you're willing to take.
When using robos, you can't choose which ETFs to pick as well.
I was really lost when I started investing initially, and robos were a good starting place for me as they helped me to understand how ETFs work.
If you are looking to learn about investing, I'd recommend you to start with robos with just a small sum first, and once you're more confident, you can start picking your own ETFs.
There are some questions I would like to ask you in regards to starting your investing journey.
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