In this post, I will show a simple calculation on One-Lump-Sum vs Dollar-Cost-Averaging investment.
The parameter is as below:
- Total cash available for investment is RM6,000
- The initial price is RM0.25 per unit
- The assumption that the sales charge for this particular fund is 5.5%
- The investment period is 6 months
- No withdrawal or dividend received within this 6 months
Based on the table above, by using the Dollar-Cost-Averaging method to spread the investment of RM6,000 over 6 months (with RM1,000 invested on the 1st day of the month), the total unit accumulate is slightly more than the One-Lump-Sum investment of RM6,000.
Of course, there are other factors involved. If the market price keeps increasing, then the total unit accumulated will be slightly less. And again, no one can time the market.
So, we are trying our best not to miss the opportunity to invest when the unit price is lower. Feel free to share your view with me. Together we learn for a better financial future.
Happy Investing!
Definitely go for Dollar-Cost method. Although the market is unpredictable, but it’s advisable to invest when the time is right instead of the same amount invested every time. Most people may not notice, but it does affect the ‘return’ as Yan showed clearly in the spreadsheet. Well done.
Smart investment is all we’re looking for nowadays.
Thanks Ching Ya, for your tips on publishing spreadsheet on blog/website. I can share/show my spreadsheet clearly 🙂 Just what I want it to be!