Dollar Cost Averaging a Better Strategy ?

What is Dollar Cost Averaging ?

Strategy in which you invest in a fixed amount of money at a regular basis/ intervals regardless of the market price of an investment .

The Question is , Not Why but HOW can this strategy BENEFITS you and me as a whole?

Lets take an example here, Let's assume we have two different investors here. One with a lump sum investment and one with a monthly investment of $100 per month for 6 months. 

                                         Investor A                         

                        Price $                          No. of
                                                            Units /
                                                            Shares

Month 1           5              $600               120                                
Month 2           5                                      
Month 3           2                                      
Month 4           4                                         

Month 5           3                                    
Month 6           5                                        

What we can see here is that , investor A invested $600 with the no of units / shares of 120 at the price or $5

                                      Investor B                         

                        Price $                         No. of
                                                           Units
                                                           / Shares

Month 1           5                  $100          20                              
Month 2           5                  $100          20                                    
Month 3           2                  $100          50                     

Month 4           4                  $100          25                   

Month 5           3                  $100          33.33                    

Month 6           5                  $100          20                       

               3.56¹ $600   168.33²

¹[( $5 + $5+$2+$4+$3+$2) divided by 6 months.]

²[ (20+20+50+25+33.33+20) divided by 6 months ]

If you can see , there's two differences in using the Dollar Cost Averaging :

1. The price are lower / cost are lower  , instead of $5 is now $3.56 

2. The no of units / shares are higher , instead of 120 is 168.33.

There by using Dollar Cost Averaging its helps us as an investor to create a better opportunity increasing profits and minimizing cost in a longer run. 

Besides  it also helps us to take advantage of the market as we can never time the market. By investing in this strategy we are always in the market whether the market is up or down and hence , we are taking the opportunity each time the market reacts. We all know the beauty of buy low but the fact is how low is low ?

Dollar Cost Averaging also promotes force savings where it creates a good habit for us to set aside our income for investment to add value in our future so that we can achieve our financial goals at a given time frame.

By doing Dollar Cost Averaging , we are less burden in our finances as we could put a comfortable level on our monthly savings / investments instead of a huge amount of lump sum to be saved / invested at a given time. This means , we could save / invest to achieve our financial goals at the same time we do not need to compensate on our lifestyle. That/s a pretty good news for you and me. 

Last but not least,  however this strategy is best to be used for a longer term of investment objectives.

If you have any questions on Dollar Cost Averaging or any other questions on financial goals planning / investment options do not hesitate to leave a comment 

  charissim.ristyle@gmail.com

Understanding Distribution of Income

As investors it is important that we are aware of the meaning of distribution of income in our own investment.




Equity Funds

The realized income comprises capital gains and dividend income. Capital gains are generated when the fund sells its investments that have appreciated in value while dividend income is earned from the fund's holdings of companies' shares.

                                                        DEPENDS:-

• market uptrend      /       market downtrend     
• stronger corporate earnings       /    weaker corporate earnings
• higher capital gains & dividends       /     lower capital gains & dividends
• higher distribution of income     /   lower distribution of income

When the market is in a favorable market condition the capital gains will increase and when the market is in a challenging market conditions the dividend income will decline. Therefore , there is a positive relationship between the market conditions with capital gains and dividend income.

Fixed Income / Bonds

Income distribution derived from :-

1. coupon income from bonds
2. capital gains from selling bonds
3. interest income from deposits

Generally , fixed income / bonds funds pays distributions to unit holders on a fixed schedule ( semi annually / annually) due to the bond issuers are usually government entities and corporations that are obligated to pay interest / coupons at a fixed intervals. Hence, the risk are lower as compared to equities.

However , investors should also know that bond prices and interest movements are in a negative relationship which means , if at any point of time the interest increases, the bond price will fall which also means that there's an impact to the capital gains generated. Conversely , when interest rates decline , bond prices appreciates and the funds are more able to generate higher quantum of capital gains.

Hence in both equities and bonds funds , investors are advised to stay in the medium to long term in order to ride out the short term volatility in both funds as well as taking the advance of the compounding interest.  Click here for compounding interest understanding

I hope that now you have a better understanding on the distributions and its always good to invest based on your financial goals and for a better portfolio management to have both funds in a certain percentage  range from 70:30 , 60:40 , 50:50 based on your own risk profile classifications.

The CPD of Wealth

Good day everyone , first and foremost i would like to apologize for not constantly updating. I am back now with all geared up and ready to go. 

As you can see today's topic will be "The CPD of Wealth" . What is the C P D? 


Without the CPD the financial planning will not be complete. CPD is an essential in financial planning in determining an your personal short and long term of financial goals. 

So let's us start with the first letter :-



C : Creation 

We first need to create before we build. By creating it only we can move the next level. How do we create ? We need to first take the first step in knowing your own goals for the short to long term. It is only upon knowing those you're able to plan and work on it in achieving it. 

In all goals settings we need to know that there is no short cut. Therefore, we need to know the 5 main elements in goals and objective settings. These are :-

S -Specific

M- Measurable 

A- Achievable 

R- Realistic 

T - Timely





P : Protection 

Often so we learned to build and accumulate our wealth we forgot that we need to protect it so that our wealth so that our love ones are the one who is able to share the joy and happiness of what we have build. Therefore the next step is to protect yourself and your wealth . The thing you need to do is get an insurance that protect your funds, Yes you heard me right , yes there is, Get yourself a PA ( Personal Accident ) too. 




D : Distribution 

As you can see once we build something we need to protect it and once we protect it we need to learn how to distribute it when its necessary. Therefore we need to be prepared and get all ready with our Will / Wasiat Writing as well as Trust Nomination services so that the wealth that is preserved can be distributed accordingly to your next in kin.

Therefore  ,  wait no more ! 

Dof eel free to drop me an email or comment if you wanna know more on the options availbale in the market. No harm knowing no harm trying ! 

Nothing is too late but if you are doing nothing then is too late !