He wanted to highlight to his colleagues that buying 1000 shares of the same stock monthly is not Dollar Cost Averaging (DCA). The concept of DCA seem to have confused some people.

Definition of Dollar Cost Averaging

Going back to basic and definition, DCA is the technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.

So Option 1, buying 1 lot of the same stock monthly is not DCA. 

Any difference in terms of performance?

The conversation went on to compare the performance or trade-off of both options. To be honest, it did not really matter to me. Both options will mean growing your portfolio and that is more important.

Nevertheless, I just did a simple calculation without including the transaction fees, any other cost and dividends (See below).

Good news is both portfolios have grown substantially over a period of 2 years

As of 30 March, the price of ES3 is S$2.88. Option 1 Portfolio is valued at S$72,000 and Option 2 Portfolio is valued at S$67.685. The good news is both portfolios have grown substantially over a period of 2 years.

So which is a better option?

The above is just an example based on a snapshot of 2 years. I personally feel the convenience of investing via (in this instance) Invest-Saver far outweighs having the discipline to buy 1000 shares of ES3 monthly via a trading platform.

With DCA, more shares are purchased when prices are low, and fewer shares are bought when prices are high. I believe not only in the power of DCA but also the simplicity in a product like Invest-Saver.

Would you start to time the market?

Would you miss out on your monthly purchases because of the higher stock price?

Would you stop buying according to your plan when the market starts turning Bearish?

Would you just forget to buy the stock for that particular month?

Educating the public, Gov.sg has mentioned on their site - What's your Plan? (click here) - that "saving for retirement can seem like a daunting task, but it need not be that way. Let us help you with tips to better manage your finances, grow your savings, and plan for your golden years."

I applaud Gov.sg for such initiatives to get people to think about their retirement. It ain't easy to get people to think for their retirement early (let alone plan for their retirement early). So since Gov.sg has been asking about our plans, here is my plan.

#WhatsMyPlan

1. Continue growing my CPF-SA to a Substantial Amount

In my previous posts - Minimum Sum of S$564,797 In Year 2047? and Four Building Blocks For My Retirement - I have mentioned that CPF is a fundamental part of my retirement. Will I totally rely on it for my retirement? NO! However, it is still a pillar to most Singaporeans in terms of retirement savings.

One known fact (hard truth) is that the Minimum Sum (now known as Basic Retirement Sum) will definitely grow / increase. Another known fact (hard truth for the next 5 years at least) is that I will continue to contribute to my CPF as long as I am employed. The Plan is simple. Just like every normal Singaporean, 1) I will continue to stay employed, contribute to my CPF and slowly grow my CPF accounts month by month; and 2) I will do micro-transfer of funds from my CPF-OA to my CPF-SA (Read - My First Transfer From CPF-OA To CPF-SA).

I have to do my part to accelerate my CPF-SA to a substantial amount and then let CPF Board do their work to compound the interest in my CPF-SA. Under the CPF Life scheme, I will then be provided a monthly payout for life from the time I turn 65. This is a form of retirement savings plus annuity.

2. Supplementary Retirement Scheme (SRS) to build a Bigger Nest Egg

I am in my 4th year of contributing to my SRS account - 4th Installment (Another S$12,750) In My SRS Account. I will not explain more about the SRS account in this post.

I have mentioned about my plan (many times) in various posts in this blog. 20 years of contribution and using the funds in the account to invest in the STI ETF. I would have contributed S$255,000 after 20 years.

In all investments, we are unable to predict how well our investment is going to pay off. With a simple calculation of an average annual return of 4%, this sum will be ~S$379,600. There will be years with big drops and years with big growth. As such, I still believe the 4% is rather conservative.

3. Generating Passive Income with Dividends Paying Stocks

I am building a portfolio of dividend paying stocks. I personally believe the stock market is one of the best source of passive income through dividend paying stocks. In my last post, Five Bloggers Collecting > S$10,000 of Dividends Yearly, I have highlighted several bloggers that have achieved it.

While I am still far from my goal of exceeding my monthly paycheck, I have seen progress over the last 2 years (see below). The next milestone is to reach the S$10,000 mark.


Conclusion

I have highlighted Three Big Components of my Plan.

Planning for your retirement is an important issue, but it is also something we often procrastinate on. I, totally, resonated with a featured video by Gov.sg (Watch it below) because I have seen with my own eyes family members that are suffering.

Jimmy: "Ready to retire?"
Uncle: "I've been getting ready since I was your age."
Jimmy: "You're joking right? Whatever I can earn, I just spend."

The video went on to share Uncle Lim's story about how he was once like Jimmy.

To my partner (that will never be reading this post), in my vows, I did mention the promise to save and grow old together in our own home.

So everyone, #WhatsYourPlan for your retirement?