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Cost averaging or one-time bigtime investment in UITF?

sj.unite · 24 · 7288

sj.unite

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I having a hard time understanding this. If, for example, I have 200k ready to be invested in UITF, should I invest it slowly (patingi-tingi) or should I put all of it one time then wait for a certain maturity period?


rhipolito

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It really depends, i tried placing in a uitf with a lumpsum amount, good thing i was able to buy low that time and that's where it began to go higher. The thing is its really hard to time the market so if you have a target percentage of return for a short period of time say 3 to 6months, i suggest you buy in lumpsum. but thats just me. =)


annanymous

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Depende sa time horizon mo at sa type ng UITF. Pero kung for long term, proven na mas effective ang cost averaging.


gang13

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In my case, since January this year, every month I invest in BDO UITF, nakakagulat ambilis tumaas ang value. I often wish sana matagal na ako nag invest dito! Siguro nag X4 na ang investment ko in 5 years.
So right now, 80% of my excess money nasa UITF na. Pero binabantayan ko lagi kasi baka bumagsak uli


sj.unite

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Thank you for your responses mga sirs. :) Naguguluhan lang po kasi ako when thinking about the difference of the average NAV that you'll be getting when doing the cost-averaging method compared to the initial NAV if you put it in a lump sum. Ano po kaya ang mas mababa na NAV in the long-run?


rodeo

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Thank you for your responses mga sirs. :) Naguguluhan lang po kasi ako when thinking about the difference of the average NAV that you'll be getting when doing the cost-averaging method compared to the initial NAV if you put it in a lump sum. Ano po kaya ang mas mababa na NAV in the long-run?
mahirap mag-predict ng gain or loss sa mutual funds and uitf, like us na taga taya lang sa pag invest.  ang kagandahan lang ng cost averaging is pwede kang bumili ng maraming share kapag bumaba ang navps and kaunti lang kung tumaas sya.  this is what i am doing, anyway 3 to 5 years naman ang target date ko to redeem and what i am putting sa pag invest ay yung extra money na sobra sa monthly budget ko.... its like saving and investing at the same time...


investormills

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@sj.unite you may take a look into this article for your reference. enjoy!

http://www.pseacademy.com.ph/LM/investors~details/id-1345021329432/Introduction_to_Cost_Averaging.html


reytave19

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i think cost averaging is best. but since may 200k ka na, pwede mo na iinvest yan ng bulk then cost averaging na after that. ganyan ginawa ko.


personalfinanceapprentice

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Yeah... personally, cost averaging is best, specially for beginners. If even experienced investors can;t time the market, how could an ordinary, newbie investor be expected to do better?

Of course, you could be an opportunistic cost-averager.

If 200K is all you have (no more additional funds to invest after that):

Take 10k or 20K, depending on your investment horizon (time before you redeem your investment)
Place the first batch now  and the second batch one month after (as normal in cost-averaging)
Look for dips.
As much as possible invest during the dip, instead of the regular schedule.
If there's a big dip, invest more.
If we're on a bull-run (as we are currently) this should net you a better return.
On a bear market, stick to simple cost-averaging - everything's going down anyway.

If you have something to invest regularly, other than the 200K (say 5K per month):
Invest the 5K now. And 5k next month (as normal in cost-averaging)
If we are on a bull run, and in a correction (like in mid-march), invest a big portion of the 200k.
If there is no correction right now, invest a portion of the 200K anyway.
whenever there's a dip invest a portion of the 200k.
Keep investing he 5K as normal.
On a bull run, it should net you better returns
On a bear market, stick to simple cost-averaging; but when the bottom is confirmed, invest whatever remains of the 200k. It's not necessary to wait for the bottom, but it would net better returns.

I'd advise simply sticking to simple cost-averaging though. It's really hard to predict the market. And what if the dip is the start of a correction? and what if a correction is actually the start of the bear, and your strategy won't work (and you just don't know it yet)

For beginners, it's much better to stick to a sound plan rather than tinker and shoot for better returns like a fund manager.
 
« Last Edit: May 31, 2013, 10:07 AM by personalfinanceapprentice »


yagami_kira

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I'm curious about bear markets....what if the bull run stops, but the stock index does not go down and it's not going up either, meaning it moves within a certain level (stabilize) with just a few period of volatility, can that considered a bear?


FFreedom3

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Reply #10 on: May 26, 2013, 01:01 PM
Here's the study of cost averaging ... I want to do a similar study with my favorite funds ...

http://www.bulbsandbubbles.com/2013/03/cost-averaging-easy-investment-regular.html


mxherr5

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Reply #11 on: May 26, 2013, 02:56 PM
@yagami, moving sideways ata tawag nila dyan..
alam ko, technically ang bear market ay kung merong sustained downward
movement ng majority ng stocks..


personalfinanceapprentice

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Reply #12 on: May 26, 2013, 10:10 PM
^ seconded.

Yeah, that's sideways. Browsing through this very forum I read it can be a pre-cursor to a bear market. I'm not an expert though, and I wouldn't myself.

But yeah, it's a bear only if there's a sustained and broad downward movement, kind of like the exact reverse of what we've enjoyed so far.


VINZEVANGELISTA

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Reply #13 on: May 26, 2013, 10:14 PM
Yeah... personally, cost averaging is best, specially for beginners. If even experienced investors can;t time the market, how could an ordinary, newbie investor be expected to do better?

Of course, you could be an opportunistic cost-averager.

If 200K is all you have (no more additional funds to invest after that):

Take 10k or 20K, depending on your investment horizon (time before you redeem your investment)
Place the first batch now  and the second batch one month after (as normal in cost-averaging)
Look for dips.
As much as possible invest during the dip, instead of the regular schedule.
If there's a big dip, invest more.
If we're on a bull-run (as we are currently) this should net you a better return.
On a bear market, stick to simple cost-averaging - everything's going down anyway.

If you have something to invest regularly, other than the 200K (say 5K per month):
Invest the 5K now. And 5k next month (as normal in cost-averaging)
If we are on a bull run, and in a correction (like in mid-march), invest a big portion of the 200k.
If there is no correction right now, invest a portion of the 200K anyway.
whenever there's a dip invest a portion of the 200k.
Keep investing he 5K as normal.
On a bull run, it should net you better returns
On a bear market, stick to simple cost-averaging; but when the bottom is confirmed, invest whatever remains of the 200k. It's not necessary to wait for the bottom, but it would net better returns.

I'd advise simply sticking to simple cost-averaging though. It's really hard to predict the market. And what if the dip is the start of a correction? and what if a correction is actually the start of the bear, and your strategy won't work (and you just don't know it yet)

For beginners, it's much better to stick to a sound plan and tinker and shoot for better returns like a fund manager.


Good day sir, im a newbie in investing, can you please give us your top 5 banks that gives best UITF for the last five years and which UITF do you prefered? thanks and God Bless..


personalfinanceapprentice

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Reply #14 on: May 30, 2013, 01:34 PM
Wow, now I'm a fund picker :D

BDO's Equity Fund (a UITF) is the best performer so far (last time I checked)

PhilEquity (a mutual fund) has been the cream of the crop so far in it's 19 years of existence.

I'm and index fund believer myself. BPI has two of those; though only one is available right now. There are also mutual funds that mimic the PSEi (Philippine Stock index Corp?)

I'm assuming you meant equity funds; everything I said was about equity funds.

(there are 4 kinds: money market, bonds, equity, balanced)

I suggest making you decision on factors other than past returns. I have a post of other factors you can consider when picking a fund.

But I'm sure there are others here who will be able to give you feedback on other funds.


 


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