How long should I be monthly cost averaging into a stock for? 6 months or 1 year? - Seedly
Seedly logo
Seedly logo
 

Stocks Discussion

Investments

Online Brokerages

Personal Finance 101

Anonymous

Asked 3w ago

How long should I be monthly cost averaging into a stock for? 6 months or 1 year?

In other words, how much money should I be pumping into a single stock . Should I stop once I have 10k, 50k or maybe even 100k invested into the stock?

0 comments

4 answers

Answer Now

Answers (4)

Sort By

In my view, if your available cashflow is enough to sustain the DCA with a transactional cost of less than 0.5%, then you can consider doing it. It's not really cost efficient if your transactional costs eat up too much of your capital.

As for how long you should invest, there is really no fixed answer. Of course, we would want to have more invested in stocks which we deem good, but there is also concentration risk, so you really should ensure that you work towards a portfolio of at around 10 counters. Each stock should not take up more than 15% of your portfolio as a guideline, so that you aren't overly concentrated. Just note that buying DBS, OCBC and UOB and having that take up 40% of your portfolio, is not diversification.

0 comments

👍 1

On Stock Picking:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=34

TLDR Version: With over 60,000 firms and stock data, the best performing 811 firms (1.33% of total) accounted for all of the net global wealth creation.

On Dollar Cost Averaging and Lump Sum Investing:

https://www.morningstar.com.au/learn/article/the-dollar-cost-averaging-myth-why-lump-sum-i/197410

TLDR Version: Most people should not be following a DCA strategy if they have a pot of gold. DCA strategy works best for people who want to invest from their monthly cash-flow.​​​

1 comment

👍 0
Jay Hou
Jay Hou

3w ago

Indeed, since it is decided to dca regularly, i m puzzled why set a deadline to dca to a few mths or stop at year
Wilson Nid A Break
Wilson Nid A Break
Level 8. Wizard
Answered 3w ago

Should cost average until its no-longer in value range and/or X weightage in your portfolio

0 comments

👍 0
Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport
Top Contributor

Top Contributor (May)

Level 9. God of Wisdom
Updated 3w ago

The lower the trading fees, the more often You could.

pragmatic approach: monthly, quarterly or semiannually all fine​​​

4 comments

👍 0

2 more comments

Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

3w ago

Reconsider if You really want to take the high risk and underperformance by investing into single stocks: https://seedly.sg/questions/what-is-your-general-investing-philosophy-strategy
Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

3w ago

And as for the duration: it is not thought for over 6 months, or over 12 months but preferably with no given time limit