Will DCA into ETF still work in the current market?

Photo by Jamie Street on Unsplash

I listened to a sharing earlier this week about money. Among the guests are Adam Khoo, a few seasoned private bankers, fund managers, business owners and, last but not least, a CIO managing multi-billion assets.

The sharing provided quite some insights regarding investment and the current markets.

I would like to share them with you in this post.

While experts still think DCA into EFTs are generally a good way of investing for completely passive investors, they do have some concerns.

For ETFs, the experts are not simply into world ETFs. They are looking at ETFs in certain industries or segment, which totally makes sense as they are professionals.

For DCA, the discussion became very interesting.

First of all, they all reflected that individual investors seldom had the discipline to stick to DCA.

From my own experiences, I shamefully support the statement.

I always tried to time the market when it was time to DCA, hoping to get a slightly better price by waiting for a few days or months.

Secondly, one expert reminded that instable cash flows also limited people’s capability to stick to DCA.

Again, from my own experiences, I shamefully support the statement.

I always thought I was conservative in the DCA amount until I became jobless. The assumption that things will continue going well limited my investment into risk management.

Thirdly, another expert suggested to join a community of like-minded people to utilize the peer pressure/encouragement to stick to DCA, which was quite refreshing.

Even though he was pitching his services, this could be a very good way to maintain financial discipline, not just DCA.

If you are already part of a such community, congratulations.

If you can find your friends and relatives to form such a community, I would suggest you do so asap.

If you are like me, neither in a community nor having the network to form one (or simply do not want to discuss this kind of matters with your current network for whatever reason), please leave a comment below. If there are more than a few, I can start a community and see how it goes.

[Disclaimer: below is based on my understanding only. Please read on your own risk.]

The market is a bit expensive now and wealth preservation is getting popular.

Suggestion to “what to do now” was to find out what you wanted first. (Whatever that means)

Everyone makes mistakes, no matter how good they are.

In Apr-May this year, when markets started to recover, very few people were bullish about the market then.

Even the CIOs of many reputable money managing giants were bearish and instructed their bankers to tell their clients to stop buying or even continue selling.

A few bankers were rumored to be “F”ed by their clients.

So even professionals make mistakes, we, individual investors, should not be too hard on ourselves.

Photo by Herman Delgado on Unsplash

So after the sharing and thinking back my own experience, I have decided to be more conservative in my investment:

  1. Cut down the DCA amount when I resume it (I have not re-started it since I stopped about one year ago, but I think this is still my approach going forward).
  2. This will allow me to accumulate a war chest over time to prepare for the unexpected or even better to invest lump-sums when the markets go down. I need to overcome the anxiety I have when I have cash sitting idly in bank accounts.

Hope we all become better investors!



Top-tier consultants seeking life purpose and self-realization

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Top-tier consultants seeking life purpose and self-realization