Asked on 02 Mar 2020
I invest a good portion of my monthly salary into StashAway as a form of forced savings (automated monthly after my salary comes at the end of the month). Recently I was burned quite badly as I entered the market right before the big dip in us equities market that happened end Feb. Is there a better way for me to enter/invest during this period?
Sorry to hear about your experience...
I think in regards to investing, it's very hard to time the market, but what is more important is to have the discipline to continue investing. As what Warrent Buffett said, Our favourite holding period is forever.
All investments are long term in nature, so do not be disheartened, because there is light at the end of the tunnel.
I have read some valuable answers from other community members.
Also, sorry to hear about your experience.
Regardless of the strategy moving forward, the best is to...well, take no action and keep investing.
Therefore, the best day is whichever is convenient for you. Set and forget is reasonable though not necessarily the best.
Cheer up and keep investing
Based on what you said, you are already doing DCA by investing every month. In that case, you don't need to worry about timing the market! Just be patient and continue doing your monthly investment, and your returns should turn positive again in the long term.
However, if you are putting such a large portion of your salary that you are going to have trouble paying for everyday expenses, then I would advise you to relook at your allocations. Ideally, you only want to put in money that you wouldn't need for the short to medium term (at least 10 years). General rule of thumb is 50-30-20 allocation, but you should adjust as needed.
And if you are unsure what DCA is, Seedly blog actually has a great article explaining what it is and why DCA takes out the element of having to time the market.
To determine if the market condition is favourable to invest, the question will be: Is there a right time to invest?
Accordingly, I have compiled a list of financial crisis and disasters since the 90s and every other strong reasons not to invest. However, the market has proven otherwise year after year.
Therefore, focus with the right investment strategy by knowing your investment objective. Then decide the tenure and decide whether to invest a lump sum or to do it via dollar cost averaging.
Lump Sum vs Dollar Cost Averaging: https://www.blog.pzl.sg/dollar-cost-averaging-singapore-does-it-really-work/
Finally, invest only into assets that suits your risk appetite.
Here is everything about me and what I do best.
Don't time the market and keep doing what u r doing. 5 years down the road, u won't see a dent in today's dip.
DCA biggest challenge is not whether it works or not, it's ppl give up halfway and start to time the market. Its all about emotion and discipline.
You're only burned if you sell and realise your loss.
Just invest regularly and stay invested. Don't invest if you don't have a long enough investment horizon.
If you believe that in the long run, investments usually trend upwards, you just need to hold and sell only when you really need the money.
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