Asked on 28 Jun 2019
Can someone please advise me on it? As I’m really quite confused despite reading plenty of articles :(
For your investments to profit, you would need to look at both capital gain and total dividends over the years.
It is recommended that you invest for long term as cost price per unit will be optimise (more units bought when price is Low, less units when price is high)
Over time, you will get dividends which you can reinvest.
Sell only when you really need the money.
As do with many other forms of investments, you generally hold the asset until you really need the cash (e.g housing/car). This is especially so for beginners who have yet to understand how to spot trends in market/pricing. For the RSP, you'll accumulate the units as you go and earn dividends. Sell the units only when you need the money not when market pickup or slump.
If you are investing in ETF on a DCA basis, please note that you need to have a long term time frame. You should not consider investing for 3 months or a year as it would not give optimal results.
Since we are looking at a long term, I would suggest not to sell the units so soon. Perhaps you can set yourself a time frame on how long you want to invest in the POSB RSP. It should be at least 10 years. After around 10 years, you can consider selling them to fund your retirement.
It depends on you, but generally it would be good to leave the units as it is to earn dividends. The dividends could be used to reinvest in other counters. However, if you would like to sell the units to get the cash back, there is nothing wrong with that, it all depends on you in the end.
Investments are basically made to earn a return and make your assets grow. This will consist of both dividend income and capitalappreciation. They should be made for a longer period of time so that you can get higher returns over and above the short term volatility linked with most asset classes. Hence, you can exit an investment if you have found another opportunity, which better suits your risk-return requirement. If this is not the case, you should exit when you need the funds and stay invested till such time to keep growing the assets.
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