In this post, I will show a simple calculation to share the differences between investment through One-Lump-Sum and Dollar-Cost-Averaging. The parameter as below:
1) Total cash available for investment is RM6000
2) Initial price is RM0.25/unit
3) Assumption that the sales charge for this particular fund is 5.5%
4) Investment period is 6 months
5) No withdrawal or dividend received within this 6 months
Based on the table above, by using Dollar-Cost-Averaging method to spread the investment of RM6k over 6 months (with RM1k invested on 1st day of the month), the total unit accumulate is slightly more than One-Lump-Sum investment of RM6k. Of course there are other factor involved. If the market price keep 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!