Asked on 20 Jan 2020
Lump-sum deposit or DCA into Stashaway? The amount is about 8K. Which method would you use and why? What's the criteria for either DCA or Lump sum investing?
1) Make sure that this 8k is not money that you need in the next 3 years.
2) Depends on which method you believe in, stick to your method. DCA is great if you do not have time to do research or monitor the markets. While lump sum investing works better in an uptrend. You can refer to this article to the pros and cons of DCA to see if this method suits you.
Generally, DCA does better in a downwards trending market while Lump sum performs better in an upwards trending market. Nobody knows whether the market will be going up or down in the near future. If you're unsure, you can consider doing 50% lump sum and split up the remaining 50% over the next few months.
I don't know. Like you, I have googled and been reading many different point of views. Everyone got something to say. I do too, now.
Every year, on my birthday, I never forget to invest my hard-earned money into my portfolio.
That is a lump sum and that is DCA. 2 in 1. Great deal, today. I hope it will reap a great return too, tomorrow in 2050.
Have you ever worried market go down right after you put in the $8K?
If answer is yes, then you should go for DCA.
DCA is giving you average result since you are averaging out your entry point, but it also give better sleep at night to most of the newbies.
Maybe you can consider putting in $3k as initial investment, and DCA the remaining $5k over a period of 6 months or so...just my 2 cents.
As a newbie to Stashaway too, i started by putting in $1k right at the start. Then i put in small amounts of money over time. The reason why I do this is because to start, i figured it makes sense to me to first put in a relatively ok amount of money (that I won't cry over if I were to completely lose it) just to try it out. Then once i start seeing returns on the principal sum, i start doing more frequent deposits.
Have you started investing with StashAway yet? Sign up with my link and we'll both get up to $10,000 SGD managed for free for 6 months!
There is no right or wrong answer to this end. Above all, it depends on your investment objectives and the risk that you are willing to undertake to achieve your goal.
In case you are wondering on the difference for the results, this article may give you some context: https://www.blog.pzl.sg/dollar-cost-averaging-singapore-does-it-really-work/
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