Info&Tips || Ringgit Cost Average

Lama dah saya bercadang nak cerita pasa Ringgit-Cost-Average (RCA) ni;
baru kini berkesempatan.. kita mulakan dengan tunjukkan graph-turun-naik-turun seperti dibawah ni.

Source: UTC-Connect
#1 Building wealth by investing in unit trusts is more a matter of patience and persistence than of investment skill and luck.

“If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what’s going to happen in the stock market.”
– Benjamin Graham, author of “The Intelligent Investor”

#2 Investing would be so simple if only one could predict when is the best time to buy or sell.
However, timing the market is impossible and many have made huge losses due to trying and consequently failing.

So?
One of the ways to ride out the ups and downs of the constant volatility of the stock market is to use ringgit cost averaging RCA method.
This method ensures we benefit from the historical strong returns shown in the long run and hedges the effects of retracement and slight downtrend in the short term.

What is RCA?

#3 Ringgit cost averaging is an investment technique intended to reduce exposure to risk associated with making a single large purchase by investing a fixed amount on a particular investment (such as unit trusts) at regular intervals (either monthly or quarterly), regardless of the unit price. 

The amount and frequency of your investments depend on your financial means and future goals.

How Dollar Cost Averaging Works?

“Save little save often – dollar (ringgit) cost averaging works, if you stick to it.”
– Paul Clitheroe, “Ten Key Steps to Wealth”, 2002.

Investing Lump sum or Monthly?
Situation: let’s say we want to save RM12,000 each year for our child’s education fund.
Instead of investing it in a lump sum and bear the risk of entering when the market is high,
we decided to invest RM1,000 into a unit trust fund each month as shown in the chart:

Results:
Average Cost Per Unit: RM0.1909
Unit Price as at December: RM0.2301
Value of Investment as at December: RM14,461.33

In this example, by using the method of ringgit cost averaging, the average cost per unit invested was only RM0.1909, instead of RM0.2500 if the investor has invested a lump sum in January.

Nota kaki~in this situation, investor tak perlu tunggu market beat the initial investment; the result already shown, those who stick with RCA, can gain the profits earlier! Jadi teruskan kaedah RCA.. tak kira ape jadi pada turun naik pasaran saham.. jika maintain invest/simpanan bulanan anda.. we totally can make profits!

Tips to Get you Started

“Those who put an investment programme in place will have a lot more money when they come to retire than those who never get around to it.”
- Australian financial author Noel Whittaker.

Many unit trust funds allow you to begin investing with a minimal amount with the option to make further contributions through regular deductions from your paycheck or bank account.

Already interested in RCA?

A few tips to help us put this RCA strategy to work for us:

• Get started as soon as possible. The longer you have to ride the ups and downs of the market, the more opportunity you have to build a sizable account over time.
• Stick with it. RCA is a long-term strategy. Make sure that you have the financial resources and discipline to invest continuously through all types of markets, regardless of price fluctuations.
• Take advantage of automatic deductions. Having your investment contributions deducted from your paycheck or bank account is an easy and convenient method to invest, and can help you get into the habit of investing regularly.
• Be prepared for losses!!! Dollar cost averaging does not guarantee that there will always be profits and no losses in your portfolio. Even though you paid a lower average cost than the average price of the units, you could still lose money if you choose the wrong time to exit the market, particularly when prices are low.

Building wealth by investing in unit trusts is more a matter of patience and persistence than of investment skill and luck.

#4The major decision that must be made is whether or not you are willing to forego immediate gratification to achieve your long-term financial goals. If you are, then dollar cost averaging can be a very effective way to help you get there.