I do NOT do any technical analyses of companies' financial statements / share price trends (nor do I know how even if I wanted to)
I spend less than 5 minutes a month thinking about my investments (probably less).
I've made $12,168.95 in the past 3 years with my blue chip investments.
(Total invested = $39,392.5; Total sold = $51,561.48; an average of 26% profit)
I've been buying shares with OCBC Blue Chip Investment Plan (BCIP), which is basically a method called Dollar Cost Averaging (this is not a paid advert. But if OCBC wants to pay me I welcome it)
Before I explain, let me do a quick summary of my investment outcomes with some simple graphs:
Y axis = $ value of share bought
X axis = time / months
1. Keppel Corp Pte Ltd
Amount invested/month : $600 - 1400 (not to time market, but because my wife wanted to join in)
Invested: $21,029.82
Sold for: $29,342.09
Profit : 39.5%
My biggest profit margin.
2. Nikko AM STI ETF
Amount invested/month : $1000
Invested: $6,099.75
Sold for: $6,860.00
Profit : 12.46%
3. Capitamall Trust
Amount invested/month : $600
Invested: $4,192.69
Sold for: $5,372.64
Profit : 28.14%
4. Singapore Airlines Pte Ltd
Amount invested/month : $900
Invested: $8,070.28
Sold for: $9,986.75
Profit : 23.75%
All of these figures have accounted for the transaction fees that OCBC charges (0.3% or $5 each counter, whichever is higher). The figures also do NOT include dividends that I've received from the 4 counters, which amounted to $1,491.78.
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So what is the secret? To preface what I'm going to say, I must state again that I am no guru. I am an absolutely clueless financial nitwit. I am not responsible for any of your financial decisions after reading this.
What is Dollar Cost Averaging (DCA)?
A simple explanation of dollar cost averaging (DCA) is this - you put in a fixed amount of money each month to a particular share. You will buy whatever number of shares that amount can afford.
E.g. You choose $100 as your fixed monthly amount. The original share price is $5. You buy 20 shares in your first month.
In the second month, the price went up to $5.20. You can now only afford 19 shares. You buy 19 shares in your second month, and the remaining $1.20 is credited back to your account.
You do this month after month, and over the long term, you profit. A longer explanation can be found here. In short, when the price is lower, the system will help you buy more shares. When the price is higher, you buy fewer shares. But the approximate amount you put in each month is fixed at a certain amount.
The key benefit of this method is that you are not trying to time the market (e.g. only buy when you think the share price is low enough, and you think it has potential to rise). Ever heard of someone 'getting their fingers burnt in the stock market'? Well, that person tried to time the market. And failed. Horribly.
You simply decide how much you are comfortable with investing each month (for me it ranged between $400 - $1500; at one point when I was job-searching I cut it off entirely, just in case I needed money), and plug that number in to a share counter you are comfortable with, and just leave it to work its magic.
Three Simple Benefits of DCA
It is less daunting to get started.
Let's just take my SIA investment - would you be willing to put in $8,000 in an investment without knowing if it will do well or not? How about just $600/month? or $900/month? This point should be self-explanatory.
Market movements do not worry you.
Share prices dropped by 20%? While everyone is jumping, you are peaceful and calm, as you do not worry about day-to-day or even month-to-month movements. Lower prices just mean you get more shares that month! Yay!
Little technical expertise is needed.
P/E ratios and market caps? Quarter-on-quarter revenue growth and typical yields? I've no idea if these terms are even real investing terms, but I may have seen them in some articles. My eyes glaze over when I see them, so if you are like me, maybe you need a simpler method like DCA, where you don't need to know any of these things. Just pick a share, and chill.
Further questions
Are profits guaranteed?
Of course not. In theory, if a share price permanently declines, that is definitely a loss. The beauty of relying on OCBC BCIP is that all of the choices are blue chip companies.
''Blue chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth"
From my limited 3 year experience with DCA, I have yet to make a loss as you can see from the above summary. Blue chip companies generally don't decline all the way.
How much time do you spend on this? How do you select which company to buy?
I rarely check how the share is doing, unless I'm bored. Every month, I receive a paper statement from OCBC about my investments, so that is the only time I pull up my spreadsheet to update that month's purchases and look at the share price. That takes like, 1-2 minutes maybe?
You only need time to select which company's counter to buy once every.... however often you sell and re-buy your shares. For me you can see it's about once a year. Each time, that takes about... 10-15 minutes maybe?
My personal method is I just check the 1-month, 1-year, and 5-years trend on Google. If the share looks like it's trending up and is generally on a high price compared to historical trends, I will avoid it. If it's on a low price compared to historical trends, I will consider it.
Warning - graphs incoming. Don't worry, it's very simple. Just look at how the line is moving.
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| highest in 1 year (and 5 years too), and general upward trend. |
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| Quite a low price compared to historical trend, and the downward trend seems to have stabilised. Seems good to buy. |
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| Fairly low price compared to past trend. |
My latest investments are in Singtel, Sembcorp Industries, and Starhub. I chose Starhub because its share price kind of collapsed in the recent quarter. My 5 minute Google search told me it was because their revenue reports for the latest quarter were quite bad. No problem, I just put a conservative sum of $400/month in it, and see how it goes. If it builds back up, I just made a steal.
Singtel, as the major player in the telco industry, is unlikely to go anywhere or do very badly, and its dividends were pretty good. Price was reasonable, so easy decision here.
Sembcorp had some interesting high spikes / low drops in its past year, and happened to be in one of its lows. Seems good to enter at this point.
As you can see, very fuss-free, very time efficient. The most time I spent was after I sold and was trying to figure out how much to cash out my wife for xD
When do you decide to sell?
My personal benchmark is 20% profit; you can vary it according to your own preference. I sold the Nikko counter earlier as I didn't see it getting much better.
Ha! Only 26%? I make 100% profits in my investments! You noob!
Do share with me how you do it! If there is an equally easy (or not that much harder) way of investing that is more profitable, I would love to learn about it.
How do I get started with DCA?
1. Pick a medium
I'm using OCBC BCIP as mentioned, as I'm used to the UI / i-banking etc and it's fairly convenient. There are other alternatives, like POSB, CIMB, etc. Do your own research! At the end of the day, I think the differences are not VAST, so just pick something convenient.
2. Decide on an amount to invest each month, and key it in.
3. That's it!
You may want to set up a simple tracking sheet so you can monitor progress each month. Do account for the transaction fees!
What other forms of investments do you dabble in?
I made the above table, somewhat as a joke, to share with my wife, to compare my DCA method with other typical savings methods. But it does show the importance of getting started on some form of investment, as the interest rates that banks give are quite low and is unlikely to outpace inflation.
But ok, serious answer time.
If you are reading this part, you may be considering what to do with your money. This is my personal advice:
- Set aside 3-6 months of salary as an emergency fund. Do not invest/spend this.
- Once you have the emergency fund, consider buying insurance. If you have HDB loans to pay off, some kind of insurance to protect that may be good (including life insurance). Otherwise, personal accident insurance is key (I just saved $500 recently thanks to my insurance).
- Account for any upcoming big ticket items you may need to save for.
- Then, you can consider how much of your income you want to set aside for investments, based on your monthly expenses.
As you can tell, I am fairly lazy, so I go for convenience in my investments. Hence, all of my other investment instruments are via NTUC Income. I am quite low risk, so I don't do anything fancy like cryptocurrency or shares trading.
- I have an OCBC 360 account. Not the highest IR in the market anymore, but reasonable. Do note that their 1.5%++ interest only applies to the first $70,000, so if you have more than that, you can choose other banks / investment tools
- NTUC Income (generally all 5% yield or more)
- Revoretire - a retirement savings plan. $2,400/year, till 65 years old. Will give me a hefty sum then (can choose to pay out over time for more profits), and together with my CPF, should be more than sufficient for retirement.
- Revosave - a 25-year savings plan that matures when I'm about 40. $1,175.25/year. Will get about $64,000 I think? Not sure. This is an Investment-linked product meaning it has some Insurance functionality too which I didn't bother to remember.
- Growthlink - some investment plan which I kinda regret buying and is making a loss now. Minimum $30,000, basically sell when you are comfortable with current price. Bought this together with my wife, we figured we can use this for our kids (if any) university fees.
If this is so good, why doesn't everyone do it?
This is not a get rich quick scheme. You generally need to hold your shares for at least a year or maybe more to see profits. If you looked at my graphs carefully above, you'll see I held each counter for at least 6 months:
- Keppel -> 24 months
- Nikko -> 9 months
- Capitamall Trust -> 9 months
- SIA -> 11 months
Also, DCA is generally seen as a low risk, low yield investment method. I mean, I'm not the most acquainted with investment yields, but 20+% sounds pretty good to me! How much do you earn with other methods?
I've also tried the 'standard' way of buying shares - I bought one lot (1000) of ST Engineering in 2014 for $3,678, and only managed to turn a profit some time in 2017 (the price never went above what I bought, despite it being 'low-ish' when I first bought it), and quickly sold for $3,761, for a measly 2% margin. Never again.
Can I invest with you?
For now, no. Firstly, it was a big headache trying to calculate how much to pay my wife when I sold off some shares. Can't imagine with more people.
Secondly, as mentioned, I am a finance noob so I don't want to be responsible for losing your money.
Thirdly, while I can see some logic in pooling resources to avoid transaction fees... this is really as fuss-free as it gets so don't be lazy! It will probably take you 15 minutes or less to set it up.
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Ok this turned out longer than I expected. If you want to tell me how dumb I am, or want to discuss investments, do feel free to hit me up! I am always keen to discuss. You can drop me an email at atqhteo[at]gmail[dot]com, or Whatsapp me if you know me. Good luck and happy investing!
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