I meant if you have spare cash that you do not need for a long time.
Scenario
Cashflow from salary after expenses 3k.
and .e.g 6k cash sitting around
1. I would just lump sum 6k immediately (100 percent equity). Zero cash available. And every month 3k comes in net of expenses, mortgage etc from salary, I will also lump sum all that amount leaving zero cash at the end of the month.
e.g. 60k cash
I would personally buy 10k every month (aggressive portfolio 80/20) + the 3k from net salary per month, every month for 6 months. then you are left 3k cashflow from net salary every month after the 60k is used, I will continue to lump sum that every month leaving cash zero at the end of every month
e.g. 600k
This is a large sum, for my appetite. I will still DCA over 6 months 60k each month but an asset allocation of 100% MBH ie fixed income, zero equity. Then I'll lump sum 100% equity the 3k that comes in net salary leaving cash zero each month. As I get more accustomed to fluctuations, I shall start selling MBH to buy equity thus upping my equity allocation over time.
I personally would AVOID topping up SA at such a young age. You will have lots of "unknown" expenses...., however, I can understand if you wish to seek the extra one percent for the first 60k.........but if ever the stock market crashes, DO NOT EVER top up SA, just go 100% equity with your cash flow.
However, ........... when I was your age.
1. I focused on hdb asap. (this is a very important money spinner, get the biggest, most expensive, highest floor, best location, best whatever)
2. then 100 percent equity lump sum any available cash I get every month every opportunity + property investing (if you can afford it), all the way till 38 yo.
3. Only in my 40s, I started to look at my CPF.
4. And lastly I found and realised only recently, that bond investing actually causes me to be very moody and distracted and unfocused. That you get annoyed when the bond did not buffer your portfolio as much yet also knowing that overall loss is still less, yet the mind seeks out to blame the bonds.
It was actually much easier to focus purely in 100% equity purchases every month even as markets are expensive as opposed to let say 60/40. Because when equity drops even big time, you expected that, your mind is conditioned.
I read a blog yesterday, and a surprising research was done covering the mood........and it turns out many people are just like me. The happiest investors are generally 100% equity even as the market corrects or tanks, not even the 50/50.
How odd behavioural finance psychology is...so this brings the most important aspect of investing which is discover your investing psychology. Trying to follow a predetermined algorithm may actually be difficult for some....anyways its just me, hope more people would advice here what they will do in your stead.
Thank you all for the advice. So basically, I should DCA every 6 months, or DCA for 6 months then Lump sum? Not so clear on that part by "swan02"
I think I will focus on topping some cash into SA if possible and invest the rest into IWDA.
Btw, I can't seem to reply directly to the post. Any tips?
