Hey, if you’re the kind of Malaysian who already puts aside some duit every month, or maybe you’ve tried investing when you have a big chunk of money, that’s a good start!
The strategy of waiting for a substantial amount before investing can feel like a powerful move, putting you firmly in the driver’s seat of your investment decisions.
But there’s this thing called Dollar Cost Averaging (DCA) that might actually be better (even during a market downturn), especially if you use auto-debit.
Imagine instead of waiting for the big amount, you invest a small, fixed amount regularly, like every month.
Wait hold on.. “Confirm tak rugi?” or “Will I definitely not lose money?”
It’s normal to be a bit skeptical, so let us clear your doubts:
🧑💼 “What if the market goes down right after my money goes in automatically? Rugi lah!”
DCA can help you during market drops. When prices go down, your fixed investment buys more units. So, when the market goes back up, you have more units to gain from the recovery. Remember, this is a long-term game.
🧑💼 “Okay but I prefer to invest a big amount when I have extra money. Auto-debit feels too small of an amount.”
We get that feeling of wanting to make a big impact! But think about the power of doing things consistently. Even small, regular amounts can grow a lot over time thanks to compounding.
🧑💼 “I’m already saving elsewhere!”
That’s great! But remember, saving and investing are different. While savings give you security, investing makes your money grow over time. Why not have both?
🧑💼 “What if I suddenly need the money?”
Versa isn’t like a traditional investment—you’re not locked in. Need access to your money? You can cash out, and it’ll be in your bank within 5 working days!
Now let’s look at Dollar Cost Averaging (DCA).
The cool thing about DCA is that it helps you ride the ups and downs of the market. When the price of what you’re investing in is low, your fixed amount buys you more units.
When the price is high, the same amount buys you fewer units.
Here’s an example***:
Let’s say you invest RM100 every month in a certain fund.
In January, the price is RM10 per unit, so you get 10 units. In February, the price drops to RM8, and your RM100 now buys you 12.5 units. By March, the price goes up to RM12, and you get 8.3 units. Over three months, you’ve invested RM300 and got 30.8 units.
Your average cost per unit is about RM9.74, which is likely better than trying to guess the market and invest a lump sum at the “perfect” time.***
This way, you don’t have to stress about timing the market, which is super hard even for the experts. By investing a fixed amount consistently, you’re basically averaging out your buying price over time, which can reduce the risk of investing a big sum right before the market tanks.
And when you automate this with auto-debit, it becomes even easier to stay disciplined without having to think about it all the time.
Of course, if the market keeps going up and up, investing a lump sum earlier might give you better returns, but predicting that is also like trying to time the market.
In which case, DCA is generally a more steady and reliable strategy, don’t you think?
Also, The Smart Way to Grow Your Kekayaan is with Less Emotions!
One of the best things about auto-debit investing is that it helps you keep your emotions in check. Investing can be emotional.
When the market is booming, you might feel like you’re missing out and want to buy high. When the market drops, you might get scared and want to sell low.
By having an automatic investment plan, you’re less likely to make impulsive decisions based on the latest news or your feelings. This helps you stay disciplined and focused on your long-term goals.
Plus You Can Leverage The Power of Compounding!
Compounding is like getting “interest on interest.” Your earnings get reinvested, and then those earnings also start to earn returns.
Over time, this can really make your initial investment grow significantly. Even a small monthly investment, done consistently for many years, can turn into a big amount thanks to compounding.
Imagine investing RM500 every month into a fund that earns an average annual return of 7%. Over 30 years, your total could grow approximately RM585,000.***
In the first year, you earn 7% on the money you put in.
Now, in the second year, you earn 7% not only on your new RM500 contributions, but also on the return you earned in the first year.
That interest then starts to earn its own interest.
Over 30 years, this ‘return on return’ effect really adds up, making your money grow much faster than if you just let that RM500 sit idle each month.***
That’s the power of compounding!
To make this even better, Versa offers Booster Quests which can give you extra returns on your investments.
Power Up Your Investments with ‘Booster Quests’ – Lagi Untung!
You can earn an extra return on your cash balance by setting up a minimum monthly auto-debit into certain investment funds.
Plus, these rewards can be “stackable” , meaning you might be able to do multiple quests at the same time to boost your returns even more.
Read more about Save Booster Quests here
Read more about Invest Booster Quests here
Read more about Retirement Booster Quests here
Having a good amount in your Employees Provident Fund (EPF) and savings accounts is definitely important for financial security. These are your safety nets.
But, betul ke cukup? Will your EPF and savings really give you the lifestyle you want in the long run, especially with the cost of living always going up?
Auto-debit investing can be a powerful way to add to what you already have and potentially reach your long-term financial goals.
By automating your investments, you’re not only being disciplined with Dollar Cost Averaging but also taking advantage of the potential for long-term compounding and even getting extra returns with Booster Quests.
So, if you’re already saving or investing with lump sums, maybe it’s time to consider the next step. Explore auto-debit investing and see how it can be your ultimate wealth hack.
*T&Cs apply.
**Past performance is not indicative of future results. Please make sure to always read the fund details before investing.
***Figures and calculations provided are for example/illustrative purposes only and do not reflect the real performance of any fund.