I had the chance to meet Michele and Rachel from StashAway as well as Kyith (Investment Moats) during the open discussion earlier in the week. It was great and I enjoyed the conversations we had on investing in general, pros & cons of StashAway, possible improvements to StashAway, etc. Looking forward to attending more of such events!
Anyway, I read Kyith’s latest post at Investment Moats on Your Returns if You Dollar Cost Average into the STI ETF with interest. Mainly because I’m attempting a similar endeavour for the next 10 years – mindless investing in the STI ETF via monthly investment plans. In fact, I’m doing the same thing with global ETFs via robo-advisors. Just that it is the robo-advisors doing all the behind-the-scenes work.
The returns for the past 10 years taking into account different cost structures are between 5% to 6%. That’s quite decent to me for just putting in the same amount of money into 1 ETF using 1 investing platform and doing nothing else. It makes me wonder what the returns would be like for the next 10 years. There are now more investing platforms with lower cost structures and it’s much easier to monitor and make adjustments.
After all, I doubt I will be the type to do nothing else. I mean, the argument is that this approach allows you to free up more time for other stuff. Spending it with your family & friends, working harder at your job to increase your salary income, watching more TV, meditating, volunteering, etc. The possibilities are endless and it’s entirely up to you to decide how to use that extra free time.
But I was just thinking when I looked at the historical price graph of the STI ETF. I know it’s in hindsight and it’s easy to talk about all sorts of actions I would have done to take advantage of the bear markets. Is it possible for me to just do one extra thing instead of doing nothing else when I employ this strategy? I don’t think it takes up much time to execute but I guess timing it would be the most difficult aspect.
If I see price dips of a significant degree, I start increasing my contribution amounts to the monthly investment plans and robo-advisors. Maybe a few hundred dollars every 5% drop? But not lowering my contribution amounts when the price subsequently increases so it’s only a one way price monitoring and investment action taken. Meaning my new base of monthly contribution amounts will only ever increase.
I guess this assumes a certain level of growth in my salary income to be able to sustain it. I reckon there should still be leftover time for me to focus on that. Besides, it’s not like spending more hours at work definitely equate to a higher salary income. There is some level of correlation but I would think more effort should go into trend monitoring so you still have a job with growth potential. Getting retrenched just eliminates or drastically reduce any shot you have at increasing your salary.
Let’s hope I’m still writing 10 years later so I can see whether this approach achieved a higher return. Taking into account all the events that will happen from now to 2027. Makes me wonder what the future us will be like.