I was Googling one day about how effective dollar-cost averaging is on a general basis and I came across this very interesting article. Although written in 1997, I find it still relevant to today’s context. It talks about the amount of risk that DCA can mitigate as compared to a lump-sum investment and a study was conducted on how different DCA periods can have very different returns for the investor. The numbers show that DCA best protects your capital (in beating lump sum investments) with an investment period of 6 to 12 months.
This is very interesting because it has always been established to me that DCA should always be used as a long term approach, maybe even to outlast an entire economic cycle.
As you might have known, I have started my investment journey with DCA using the OCBC Blue Chip Investment Plan. Being 14 months into the plan now has made my final capital to be roughly $9000 all vested in the STI ETF. It seems like my returns with BCIP is somewhat aligned with this article.
I am considering to cancel this plan so that I can free up $600 per month for other stock options which I have been analyzing and monitoring for these past few months. Since I have a trading account set up now too, I can consider to buy more of the STI ETF with it and reduce my overall transaction charges. I’ll monitor for a little while more to see how things go.
Thanks for reading!
Miss Niao xoxo