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What to do next if those who have just started DCA investments and used to have high returns, but now lose and tend to lose more and more? Should they switch to another investment, or what? This time, ACU PAY will introduce the right investment advice and how to increase return. Let’s find out.
DCA stands for Dollar-Cost Averaging which is a continuous investment, whether weekly, monthly, or annual, that will be made at the same amount regardless of investment conditions or value fluctuations along the way. This investment method is popular among both old and new investors, it is also a regular exercise in investment discipline to make investments while reducing anxiety or mood in investment decisions and reducing market timing.
Who does DCA’s investment style suit?
1. Make the right investment
DCA is a long-term investment that focuses on long-term wealth creation. Therefore, investors should choose investments that are suitable for investors and returns that have long-term growth potential. Invest in assets with higher price potential in the future, and good business prospects such as stocks with good fundamentals, growth, or equity funds. Moreover, we should check our investment stocks at least once every six months or a year to ensure that the investments we have selected are still generating good returns.
2. Diversify the risks
The diversification of risk mitigates losses if there is a high volatility in the market. Therefore, we should diversify investments as appropriate, not just one, but not too much because it will be difficult to keep track of prices and information.
Another important factor is rebalance or rebalancing of the portfolio to a planned proportion. The advantage of this adjustment is to ensure that portfolio diversification is in line with changing market conditions, allowing investors to sell assets at higher prices and buy cheap or lower prices.
3. Invest at least 10 years or more
Albert Einstein once said, “Compound interest is the eighth wonder in the world. Anyone who understands it will get it. Those who do not understand it will lose it.”
The amount of principal increases automatically and interest will increase accordingly. This means ‘interest compounded’ with DCA investments, which will be a miracle. The longer the investment, the more time it takes to make a successful investment.
For example, Mr. A saved 5,000 baht per month, and 60,000 baht per year without investing at all. Over 50 years Mr. A will have only 3,000,000 baht. On the other hand, Mr.B used 5,00 baht of his savings to invest in assets with an average annual return of 8% every month. After 50 years, Mr. B would have 36,037,765.82 baht more than Mr. A who had just saved money.
DCA investments are likely to have a significant impact of time on long-term returns. The benefits of long-term investments are that they may receive low average costs and good returns in the long run. However, all investments have risks. Always study to be sure before starting.
