Dollar Cost Averaging
September 23rd, 2009 by FinanceGuru
The meaning of “Dollar Cost Averaging” is a timing strategy of investing equal dollar amounts regularly and periodically over specific time periods into an investment portfolio or a fund such as exchange traded funds (ETFs). For eg $150 monthly or $600 every quarter. This method of investment is commonly used in Investment Linked Policies (ILPs) from different insurance companies.
Personally, I am not very convinced about this strategy thus I will be putting it to the test and I will be using my money in my CPF-OA to make a quarterly investment of $2000.
Since I feel that I won’t be getting married anytime in the near future, I think its approriate for me to use the excess fund from my OA for investment.
The $2000 that is deducted quarterly from my OA will be allocated into a fund that I’ve chosen and is none other “Singapore Equity Fund”. You might be wondering why not “China Equity Fund” since currently China is the 2nd largest economy after the United States and China has plenty of “cash” compare to the “debts” that United States is having. Well, that is true but lately the market in China has been hot and it has been going up quite a lot in the past 3 months and I am afraid that the market went up not because of their true fundamental value. A recovery doesn’t happen in a few months. It takes few years for an economy to fully recover from a recession and I am skeptical about the recent rally. I think I am more comfortable investing on something that I know more about and something that is close to me. So, staying in Singapore, and seeing the construction that is on-going at Orchard, Marina Bay, Sentosa Island and not forgetting Pulau Bukom where Shell is currently building an Ethelyne Cracker plant gives me the extra vote of confident that the economy of Singapore will boom for the next few years. And besides that, don’t forget that Singapore is governed by very strict and smart people which makes illegal trading such as insider trading very difficult and stiff penalties are given to those who are caught breaking the law!
I will be updating my entry prices and the number of units I am holding after I get my statement from Axa Financial. And lastly for more information about dollar cost averaging, do visit http://en.wikipedia.org/wiki/Dollar_cost_averaging for more info.
Disclaimer: This above thread is not meant to be a recommendation to buy into Singapore Equity Fund. Please do your own due diligence. Investing involves risk and it might not be suitable for everyone.
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My
name is Jeff. I enjoy travelling especially with my Nikon D80 capturing the
wonders of the world. I am bless with a group of
buddies who enjoy travelling like I do, not forgetting my wife as well ~ Jasz.
We always source for information and plan our itineraries to ensure splendour
trip. Hope you enjoy reading my trip adventures! 
