Should I invest one lump sum or DCA into Robo-advisor monthly as a student?

I am a student and is bonded with a local organization. They give me a lump sum of money as allowance which I will pay for my uni tuition fees. That leaves me with a 4.2k surplus as expenses budget. However, they also give me 2.5k as incentives if my CAP goes beyond a certain %.

Now, I have put a comfortable amount in SSB as savings and the rest for my expenses. I am looking to invest 1k in Funding Societies and another 1k in StashAway each year.

In StashAway, should I invest the 1k straightaway or set it such that my account will invest $100 monthly in the portfolio?

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Discussion (1)

Brandan Chen

15 Aug 2018

Financial Planner at Manulife Singapore

There is no hard and fast rule in terms of choosing between lump sum vs DCA. Another point to note is how long your investment horizon?

If you are generally looking at long term, 10+ years, both strategies would allow you to benefit if your underlying investment performs. The difference is the investment gains which also largely depends on how the markets move as a whole.

Well, for my personal opinion, given that the future outlook is not very certain and that 2017 had been a phenomenal year for investors, coupled with the fact that and economic crisis hasn't struck for the past 9 years, I would very much go for DCA. This is because most investors tend to pull out when their investment falls sharply. If the market does tank in the next year, the impact of your paper losses will be cushioned with a DCA strategy

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