By Navin Sregantan & Gwendoline Tan
If you’ve only got a minute:
- Explore investment strategies like lump-sum investing or dollar-cost averaging (DCA), or a blend of both.
- Combining lump-sum and DCA provides flexibility, allowing you to invest steadily while also taking advantage of market dips.
- You can create personalised portfolios or choose ready-made solutions like digiPortfolio for professional management tailored to your goals.
Investing your savings is about safeguarding your future and ensuring your hard-earned money doesn't lose its value over time.
Yet, the world of investing can feel intimidating. Many are held back by the fear of making mistakes, the perceived complexity of investing, or simply not knowing where to begin.
While daunting, like anything new, the simple act of taking the step to overcome inertia can make all the difference.
Before starting, be aware of your financial circumstances, set aside at least 3 to 6 months in emergency savings and assess whether you have the appropriate insurance cover. Once that's in place, think about what you hope to achieve with your investments – your goals, how much risk you're comfortable with, and how long you plan to invest.
From there, you can explore different strategies, with lump-sum investing and dollar-cost averaging (DCA) being the 2 common approaches. A combination of these methods may also best align with your individual circumstances and financial aspirations.
Read more: I’m ready to invest, how can I start?
Lump-sum investing
Lump-sum investing involves deploying a substantial amount of capital into a chosen investment at once.
It is particularly well-suited to those with significant accumulated savings, such as mid-career individuals. They’ve often built wealth over time and reduced major financial obligations like mortgages, affording them the financial capacity for larger, one-time investments.
This may also apply to those who have diligently set aside funds, waiting on the sidelines for the optimum time to invest.
Dollar-cost averaging (DCA)
DCA offers an alternative approach, especially well-suited to those with limited readily available capital, such as young professionals and recent graduates, as well as those looking to build their confidence as they begin their investing journey.
Rather than investing a large sum at once, DCA involves making smaller, regular investments into the same asset over time. This strategy "averages out" the purchase price, mitigating the risk of investing heavily at a market peak.
This steady, progressive approach removes the pressure of trying to perfectly time the market. Moreover, DCA can be easily automated through a regular savings plan (RSP) like Invest-Saver, which makes recurring investments or "investing on repeat" a simple and hands-off process.
To get started, simply set aside a pre-determined amount for investing—starting from S$100 per month—on a fixed day each month into diversified investment products.
Read more: What to know about DCA
Find out more about: Invest-Saver
Blending lump-sum investing & DCA
When investing, the temptation to time the market is strong, but even seasoned professionals find it challenging. Trying to perfectly time the market can cause them to miss the best trading days.
For example, between 2005 and 2024, the S&P 500, the benchmark index for US large-cap stocks, saw 7 of its 10 best days occurring within 2 weeks of the 10 worst days.
Being fully invested during this period yielded an annualised return of 10.4%, while missing the top 20 days would have reduced that return to a mere 3.5%. This highlights the importance of prioritising "time in the market" over market timing.
What you can consider doing is taking a hybrid approach where you use DCA to steadily build a base, supplementing it with lump-sum investments in tranches when compelling market opportunities arise or during periods of market volatility.
Ultimately, a long-term approach recognises that most stocks deliver returns over time, reflecting overall economic growth and accumulating company profits that ultimately benefit shareholders. Sticking with a well-defined, long-term investment strategy, rather than chasing short-term gains, is key to driving their portfolio returns.
Personalisation
Some investors prefer to construct their portfolios by hand-picking investments tailored to their needs.
While this more hands-on approach requires greater involvement in selecting and allocating individual investments, it doesn’t mean you must commit to stock picking.
Instead, this can be achieved through disciplined, regular investing with Invest-Saver, offering significant flexibility to personalise with a curated selection of ETFs, unit trusts, or even a ready-made digiPortfolio.
Risk-averse investors can lean towards fixed income and dividend-focused options, while those with higher risk appetites might favour more equity-focused investments. Meanwhile, you may choose unit trusts focused on specific markets (local, global) or industries (banks, property, etc.) that are of interest or conviction to you.
To help simplify the decision-making process, the investment experts at DBS have curated an essential list of funds called CIO Insights Funds that form a steady base for building an investment portfolio.
These funds have a long-term focus, providing diversification across key markets and asset classes in order to weather various market conditions.
Find out more about: Start Investing with CIO Insights Funds
Leaving it to the experts
For a more hands-off approach, consider ready-made discretionary portfolio solutions like digiPortfolio, which offers diversification benefits and a low barrier to entry, all with oversight from the investment professionals at DBS.
Whether your goal is income generation, retirement planning, or simply growing your wealth, digiPortfolio provides access to a curated set of geographically diversified portfolios, which are rebalanced quarterly to ensure optimal asset allocation and resilience.
The Retirement digiPortfolio automatically allocates your funds according to your desired retirement age, adjusting the risk level of your portfolio as time passes. This is aimed at growing your wealth more at the start before transitioning to a focus on stability as you approach retirement.
Read more: Investing according to your changing life stages
Find out more about: Retirement digiPortfolio
Getting started is easy. All you have to do is login to digibank and locate “digiPortfolio” under the “Plan & Invest” tab. After you complete a short questionnaire about your investment objectives and risk appetite, suitable digiPortfolios will be recommended.
Choose from the recommended portfolios based on your comfort level with risk and decide whether to invest with a lump-sum or through Invest-Saver.
Find out more about: digiPortfolio
As with any investment, any fees incurred can eat into your overall returns, making it important to know the fee schedule of the investments you are undertaking – how and when they are charged.
Invest-Saver fees are dependent on the underlying investment. This means that if you invest into a unit trust under Invest-Saver, the standard 0.82% transaction fee applies each month the investment is made.
For digiPortfolio investments via Invest-Saver, there are no additional upfront transaction fees on top of the annual management fee at the time of writing.
Stay committed but flexible
The words of author and coach Tony Robbins, “Stay committed to your decisions, but stay flexible in your approach”, hold true even in our investment journey.
Stay committed to your investment goals and build the foundation of your portfolio by investing regularly via DCA. Keep a flexible approach by making lump-sum top-ups as and when suitable opportunities arise.
Aim to start investing as early as possible, and embrace the virtues of discipline, time, and patience, so as to grow your wealth and reap the full benefits of compounding. If necessary, speak with a DBS Wealth Planning Manager who can explore your financial planning options with you.
