In General, Is it safe to do a monthly $500 DCA to 3 different accounts for 12 years then after that just focus on personal saving monthly and CPF life as a form of retirment planning? - Seedly
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Asked on 29 Nov 2019

In General, Is it safe to do a monthly $500 DCA to 3 different accounts for 12 years then after that just focus on personal saving monthly and CPF life as a form of retirment planning?

I am 35 year old this year and married with children with a 4rm bto. Thanks!


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Hi anon,

I would not do so. You are going to be charged the higher of 0.3% of the total transaction amount, or $5 per counter, whichever is higher - in this case, $15 dollars each month. That's 1% of your transaction cost.

Instead, look towards identifying the right stock, and waiting for the right price. I would usually try to keep transactional costs to at most 0.5% of my transaction value, any more than that is in my view, pricey. That will require time and knowledge, but while you wait, you can accumulate the $1500 in a warchest.

However, I also recommend diversifying, you can easily do $500 a month into 2 different UTs with no transactional costs, so that is an option for you. UTs allow you to diversify instantly. Then $500 a month can be channeled to a warchest for the right stock at the right price. And the last $500 can be used to get an annuity to hedge your risk and complement CPF life as part of your retirement planning.

Given your situation of staying in a 4rm BTO, if you do not intend to upgrade, then you should comfortably pay off the loan before 55. Your OA and SA savings can then form another layer in your retirement income stream. So with CPF life, the annuity, dividend paying UTs, and dividend paying stocks rounding out the portfolio, you should be able to have a comfortable retirement.


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Unless you are paranoid about custodian counterparty risk - one broker account where you DCA into 3 different types of counters/exposures should be fine. Going 3 different accounts is a bit over.


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Question Poster

29 Nov 2019

Dear all, sorry I meant 3 different BC counters with OCBC BCIP. My apologies for the wrong term used that cause the confusion to answering.
Kelly Trinh
Kelly Trinh

29 Nov 2019

Unless the counters you are DCAing into are diversified UT / ETFs then you likely lack enough diversification and while DCA helps to reduce volatility at lot, you are exposed to danger that 1 of the counters turns out to be a dud (eg if you had Singapore Airlines the last 10 years - it went ***down*** by 50% over that period...)
Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 29 Nov 2019

In general, your question is too generic to give an answer mate.

why 3 different accounts? for what purpose does each account have? and why 12 years only?


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Unfortunately, there is no one-size-fits-all solution - we will need to perform a detailed calculation in an attempt to give you a projection that you are confident to achieve. Otherwise, we will be wasting time and to only look back with regrets.

Firstly, it will be valued to have a full and complete understanding on your cashflow - understand your income and income potential; expenses with projections for the future. This is important as part of the comprehensive planning for your future. Here are some key ratios that you should know:

After the initial calculations are done, we will have a concrete number to look at for your retirement. From there, we can work backwards to decide the optimal and feasible amount for your wealth accumulation and retirement needs.

Additionally, it depends on what type of instrument that you are buying into using dollar cost averaging. Additionally, take note that it is not a foolproof investment strategy. Find out why:

The feasibility of CPF Life as our only retirement tool is questionable. Therefore, it will always be valued to have an additional annuity to supplement our CPF Life. This way, you will be confident during your retirement years.

All things considered, the best way is to speak with a consultant that is capable to help you with the necessary calculations such that we optimise the time that we have to achieve what we want before we retire. Ultimately, time is a limited resource.

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