Should i invest all via Lump-Sum or Regular Savings Plan (RSP)? What is the best method to rebalance and how? - Seedly
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Say Kiat

Asked on 30 Jul 2018

Should i invest all via Lump-Sum or Regular Savings Plan (RSP)? What is the best method to rebalance and how?

1) With a sum of money, how should I invest all a) in stock 70% and 30% bond in this current market cycle or b) do a RSP every year together with rebalancing?

2)May i know what is the best method and how to rebalance every-time throughout the market cycle for 20-30 years?

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Bang Hong
Bang Hong
Level 6. Master
Updated on 07 Jun 2019

By theory "investing ALL" sounds like a bad idea, as the context of "ALL" might differ from people to people.

With assumption your "ALL" is the amount you are willing to set aside and with other expenses/savings covered accordingly:

1) There is no "best method" , all suits to your personal cash flow. financial management, duration (tenure) , risks appetitate and many more.

2) Typically "professional" says 110 - your age = To invest in equity. For example 40 years old, 110 - 40 = 70. So you get this magic number of 70% stock and 30% bond in your example.

3) Depending how hardworking you are, I would prefer NOT to RSP, and to invest from time to time, rebalance whenever I need to.

4) No best method to rebalance or time frame, because sad to say, market reacts in different ways and sometimes in wonders. If you want more certainity or stability, ETFs might be a good way to start.

Personally I rebalance about 2-3 times a year with no fixed duration, usually Q1, Q3 and Q4.

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Say Kiat
Say Kiat

06 Aug 2018

Thks for answering. Appreciated. Correct me if I'm wrong: While risk profile remains same or changes due to personal circumstances So it will not be a fix amount from time to time when rebalance is done? Can explain how do u do the rebalance part like for my investment assets stock n bonds if deviated >5%, start to sell the winners n buy the losers or do u consider market cycle too to enter? Any recommendations for reading or seminar to attend on this?
Wei Chin
Wei Chin
Level 4. Prodigy
Answered on 29 Nov 2019

1) Lets assume that you have S$20k in cash (uninvested). Hence your question should really be what is your desired portfolio at this point of time.

Comparing to somebody who is invested (e.g. 60% equities, 30% bonds, 10% cash/money market fund) and all these asset has a combined worth of $20k, you have 100% cash that is worth $20k.

You are not better off or worse off than the person who is invested. (I am assuming that the "invested" person is not investing into some illiquid bond/equiities)

Your question should then be - how should you be allocating your asset according to your financial plan.

If you are thinking of keeping $10k out of $100k as cash and slowly invest over time, nothing wrong with that. Just need to be clear of what exactly is your investment portfolio over time.

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