Why is Dollar Cost Averaging a crucial strategy during times of market volatility and how it can fortify your Precious Metals Investments.
Investing can be a daunting task, especially when faced with the unpredictable nature of the market. The fear of buying high and the uncertainty of when to invest often paralyze even the most seasoned investors. Enter dollar cost averaging (DCA), a simple yet powerful strategy that can help you navigate market volatility and achieve long-term success.
What is Dollar Cost Averaging?
Dollar cost averaging is an investment strategy where you consistently invest a fixed amount of money at regular intervals, regardless of market conditions. Whether the market is up or down, the same amount of money is invested, allowing you to purchase more shares when prices are low and fewer shares when prices are high. This approach reduces the risk of making a poorly timed investment and helps smooth out the impact of market volatility.
Benefits of Dollar Cost Averaging
- Reduces Market Timing Risk: Trying to time the market—buying when prices are low and selling when they’re high—is particularly difficult. Even seasoned investors struggle with predicting market movements accurately. Dollar cost averaging eliminates the need to time the market. By spreading out your investments over time, you reduce the risk of making a significant investment right before a market downturn.
- Moderating Emotional Investing: Market fluctuations can trigger emotional reactions, leading to impulsive decisions like panic selling during downturns or overbuying during booms. DCA encourages a disciplined approach to investing, helping you stick to your plan even when the market gets turbulent.
- Encourages Regular Investing: One of the biggest challenges for investors is simply getting started and staying consistent. DCA makes it easier to establish a regular investment habit. By committing to invest a set amount each month, you progressively build your portfolio without the pressure of finding the “perfect” time to invest.
Dollar Cost Averaging vs. Lump-Sum Investing
While DCA involves gradually investing over time, lump-sum investing is the practice of investing a large sum of money all at once. Each method has its advantages. Lump-sum investing may yield higher returns in a rising market, as more money is invested earlier. However, it also exposes the investor to greater risk if the market declines soon after the investment is made.
DCA, on the other hand, spreads out the investment, reducing the impact of short-term market fluctuations. This makes it particularly appealing to risk-averse investors, those entering the market during uncertain times or for those who are just starting to invest in the market.
Real-Life Examples of Dollar Cost Averaging:
- Long-Term Gold Investment from the Early 2000s
– Scenario: In the early 2000s, gold was trading at around $250-$300 per ounce, a period when it was largely out of favour among mainstream investors. However, some investors believed in the long-term value of gold as a hedge against inflation and currency devaluation.
– Dollar Cost Averaging Strategy: A long-term investor decided to purchase a fixed amount of gold every month starting in 2001. Despite fluctuations in gold prices, they continued to accumulate gold consistently over the years.
– Outcome: By 2011, gold had reached an all-time high of nearly $1,900 per ounce. The investor, who had been accumulating gold steadily for a decade, had amassed a significant quantity of gold at an average price well below the peak. The appreciation in gold prices led to substantial gains, illustrating the effectiveness of DCA in building wealth over the long term.
- Post-2020 COVID-19 Pandemic
– Scenario: The onset of the COVID-19 pandemic in 2020 led to unprecedented economic uncertainty. Gold and silver prices surged as investors flocked to safe-haven assets, but prices were highly volatile.
– Dollar Cost Averaging Strategy: An investor began a precious metals accumulation plan in early 2020, contributing monthly to buy both gold and silver. Despite the high volatility, they remained consistent with their purchases.
– Outcome: As the pandemic progressed, gold reached new highs in mid-2020, while silver also experienced significant gains. The investor’s strategy of regularly investing in both metals allowed them to benefit from the rising prices while avoiding the pitfalls of market timing. Their portfolio grew in value, showing how DCA can work even in times of extreme market stress.
Key Takeaway Points for DCA:
– Consistency is Key: All these examples highlight the importance of maintaining a regular investment schedule. By sticking to a DCA strategy, investors were able to accumulate precious metals at an average cost that was favourable over time.
– Volatility is an Opportunity: Market volatility can work in favour of a DCA strategy. By buying more during dips, investors can reduce their average cost per ounce.
– Long-Term Perspective: The success of DCA is often most apparent over longer time periods. Investors who consistently apply this strategy, even during uncertain or bearish markets, are often rewarded when the market recovers or rises.
To find out more about GSAP, please click on the below link:
GoldSilver Central Savings Accumulation Program – GoldSilver Central Pte Ltd
Personal Finance: Understanding Its Importance
Before delving into the details, it is crucial to comprehend why personal finance holds such significance. Understanding where your money goes and how to allocate it effectively is key to achieving financial goals. By mastering the fundamentals of personal finance, you gain the power to make better financial decisions.
1.1 Financial Security: A Compelling Drive
One compelling reason to grasp personal finance lies in achieving financial security. By skillfully managing your income and expenses, you empower yourself to save and invest wisely, paving the way for long-term stability.
1.2 Debt Management: Taking Control
A firm grip on personal finance can also aid in managing debt efficiently. By comprehending loan terms and interest rates, you can devise a plan to minimize debt swiftly and effectively.
1.3 Future Planning: Crafting Your Path
Knowledge of personal finance proves invaluable when planning for the future. Whether your dreams involve homeownership, entrepreneurship, or retirement savings, understanding personal finance concepts helps you reach these milestones with greater efficiency.
Setting Financial Goals: Paving the Way
Embarking on personal finance planning necessitates defining your financial goals. It is essential to identify what you strive to achieve with your money before crafting a roadmap to success.
2.1 Short-Term Goals: Embracing the Near Future
Short-term financial goals encompass achievements within the next five years. This may entail paying off credit card debt, saving for a dream vacation, or accumulating a down payment for a car.
2.2 Medium-Term Goals: Embracing the Horizon
Medium-term goals encompass targets to be achieved within the next five to ten years. This could include saving for a home down payment, venturing into entrepreneurship, or paying off student loans.
2.3 Long-Term Goals: Embracing the Journey
Long-term goals encompass financial objectives spanning over ten years. This often involves saving for retirement, funding a child’s education, or building a robust investment portfolio.
Assessing Your Financial Situation: The Starting Point
Once your financial goals are defined, the next step is evaluating your current financial situation. This entails calculating your net worth, which is the difference between your total assets and liabilities.
3.1 Income: Fueling Your Financial Journey
Begin by listing all your sources of monthly income, including your salary, bonuses, commissions, side gig earnings, or any regular inflows.
3.2 Savings: Building Your Safety Net
Next, assess your total savings, encompassing traditional and high-yield savings accounts, certificates of deposit, and money market accounts.
3.3 Investments: Growing Your Wealth
Consider any investments you hold, such as stocks, bonds, precious metals, mutual funds, real estate, or retirement accounts.
3.4 Assets: Valuing Your Worth
List your assets, including your home, car, and any other valuable possessions, using their current market values.
3.5 Expenses: Navigating Your Financial Landscape
Finally, outline all your monthly expenses, ranging from rent or mortgage payments to utility bills, groceries, transportation costs, and other regular expenditures.
By embarking on this journey of understanding and implementing personal finance strategies, you empower yourself to navigate the financial landscape with confidence and achieve your desired financial future.
Creating a Budget: Mastering Your Money
Having a budget is the cornerstone of successful personal finance management. It empowers you to take control of your finances and ensures that you’re living within your means.
4.1 Allocating Funds: Prioritizing Your Priorities
When creating your budget, it’s crucial to allocate funds for your essential expenses first. Think of it as building a solid foundation for your financial well-being. Start by earmarking money for housing, food, and transportation, and then you can indulge in non-essential expenses like entertainment and dining out.
4.2 Paying Off Debt: Breaking Free from the Shackles
Your budget should also include provisions for paying off any lingering debt. Liberating yourself from debt is paramount, as it saves you from paying unnecessary interest charges. Remember, the sooner you pay off your debt, the faster you’ll be on your way to financial freedom.
4.3 Saving for Goals: Dream Big, Save Smart
In addition to expenses, your budget should include savings for your short-term, medium-term, and long-term goals. Make it a habit to pay yourself first by setting aside a portion of your income for savings before allocating money for other expenses. This way, you can turn your dreams into reality.
GSC Savings Accumulation Program (GSAP) is a versatile savings program designed to help people achieve their financial goals. It offers a convenient way to accumulate and manage Precious Metals Holdings in physical Gold, Silver and Platinum. Unlike most savings programs which may require longer periods of time for maturity, you may liquidate your precious metals holdings or convert them into physical precious metals products after a minimum commitment period of 3 months. Learn more about GSAP today!
Preparing for Emergencies: Expecting the Unexpected
Building an emergency fund is an essential part of personal finance management. This fund acts as a financial safety net, ready to catch you when unexpected expenses or financial emergencies arise.
5.1 Importance of an Emergency Fund: Weathering the Storm
An emergency fund is a true lifesaver. It shields you from unexpected costs like car repairs or medical bills without relying on credit cards or loans that can trap you in a cycle of debt. It’s like having your own superhero in times of crisis.
5.2 Size of Emergency Fund: Tailoring it to You
Ideally, your emergency fund should cover three to six months’ worth of living expenses. However, the exact amount depends on your personal circumstances, such as your monthly expenses, income stability, and tolerance for risk. Customize it to suit your needs and sleep soundly knowing you’re prepared.
5.3 Where to Keep Your Emergency Fund: Easy Access, Peace of Mind
Your emergency fund should be easily accessible when the need arises. Consider keeping it in a high-yield savings account that offers better interest rates than regular savings accounts, ensuring that your money grows while remaining within reach.
Understanding personal finances may be daunting at first. However, once you get a hang of it, it would bring you closer to your financial goals. Create a better financial future for yourself by equipping yourself with financial knowledge today!
Greetings from the GSC Savings Accumulation Program’s Team!
In a few days’ time, we will be celebrating the joyous and festive Lunar New Year! I’m sure there are many who can’t wait to receive blessings in the form of money packed in little red envelopes from our parents and relatives. Well, there are also many of us who will be giving blessings out to our little ones as well as our family and friends. Tradition has it that once you are married, you can give out blessings in the form of red packets to family and friends who are still single, or if you’re single, as a form of expressing appreciation to parents and grandparents for raising us!
Has it ever crossed your minds that we can snowball the angpow money we received by putting it into the GSC Savings Accumulation Program (GSAP), and start accumulating precious metals (Gold, Silver, and/or Platinum)? We can even choose to exchange the accumulated holdings into a physical bar/coin upon plan maturity! Well, we can also accumulate the money we wanted to give our parents and grandparents this year, by putting them into GSAP, and taking physical delivery of an item upon plan maturity, and giving them as a form of Precious Metal instead of the usual plain red packets they receive from everyone else! We can also deliver the items at a small fee, depending on the item you selected, and the delivery location.
Sounds interesting? You can find out more and sign-up for GSAP here. Drop us a text over at +65 8893 9255 or email us at GSAP@goldsilvercentral.com.sg and we will be happy to share more with you!
Wishing you and your family a prosperous Lunar New Year!
Wendy
GSC Savings Accumulation Program (GSAP) is a unique program whereby we help investors to accumulate precious metals based on the Dollar-Cost Averaging method. By putting aside a minimum amount of SGD 100 a month for 1 cycle (3 months) to accumulate into your preferred precious metal type you are technically doing the following:
Taking reference to a month with 20 business days, you will be accumulating $5 worth of Gold daily;
($100 / 20) = $5 will be used to purchase into Gold
The value of holding these precious metals way surpass paper currencies or coins due to its unique diversification role in an investor’s portfolio. Regardless of the Market condition and by investing in precious metals daily with GSAP, you would have had unknowingly diversified your portfolio to:
- Hedge for Inflation
- Protect against Deflation
What’s so intriguing about this program is that you can flex it anytime. – you can sell part of your holdings for cash or take *physical delivery during the accumulation period. As these holdings are physical holdings, there is a storage fee of 2.5% per annum, calculated on a daily basis, which works out to be less than S$0.50 for the whole month during your first accumulation month. As your holdings increase, the storage charges will increase as well. For a $100, storage fees are less than 1 cent, if fact it is only 0.7 cents per day!
Fancy a piece of Gold bar or coin? Opt to take physical delivery against your holdings by contacting us, and we can arrange all these for you.
Signing up is just a click away, head over to our website, and click on the “Sign Up” button under the GSAP section. We look forward to helping you accumulate your savings in precious metals for all occasions and needs.
*Physical Delivery refers to swapping your accumulated holdings for a physical precious metal bar or coin of your choice. Most of our Gold bars are LBMA accredited and are recognized internationally. When taking physical delivery, a premium top-up is required, and the amount varies from product to product.
Wendy
CNY 2021 is no doubt a more muted event this year. Now that the first few days are over and your kids have counted majority of the hongbaos, here’s some tips to maximise their hongbaos.
Teach your kids cash management.
Ultimately, it’s your kids’ finances. They should be part of the process of maximizing it. Take this chance to teach children about the importance of cash management and how they could allocate their money according to their needs and wants. One way would be to split up their money into several “buckets”; spending, savings, investments and filial piety. What better way to get them started on giving back to their parents!
Deposit them into a Savings Account
This used to be a no-brainer! Savings are important but with interests at the low rates savings account currently are, at 0.05% p.a., and global interest rates remaining low for the foreseeable future, there are much better ways to grow your kids’ wealth.
That said, emergency liquid funds are important for rainy days. So do allocate some portion into their savings accounts still.
Invest them into a Blue Chips Plan or ETFs
A very simple way of using dollar cost averaging (DCA) to “stack” your investments. Multiple banks offer the blue chip accumulation plan in their services and setting up a monthly automation is very straightforward. These banks also usually have investment arms which allow one to easily set up a CDP account and brokerage account for investments into ETFs or specific shares.
Wondering about the merits of DCA? That’s a topic altogether for another time.
Invest the money into Gold
With Gold increasing by 25% in 2020 and the rest of the precious metals classes enjoying similar if not more capital gains, it’s a good time to look into diversifying into other asset classes too. Many used to think that buying precious metals would be very traditional and outdated. Now, there’s much more convenient ways to buy into precious metals.
Buying via the retail route
Buying Precious Metal bullion has never been easier than now. Register account online and you can then scroll through the website and select what you want! All these in less than 5 minutes. You can even choose delivery to your doorsteps! Alternatively, head down to the retail shop to do your collection. Do remember to make appt here first and remember to practise social distancing!
A side note here, we know of one family who comes down after CNY every year and the kids literally bring along their hongbaos and swap them to silver bullion. If you are reading this, you know who you are 🙂
Daily accumulation system via mobile
Ever thought of diversifying your portfolio but was unable to due to cost or practicality constraints. (It is way too expensive to buy 1g gold, 1g silver and 1g platinum) Well now, that’s resolved with the use of your mobile phone.Set up an autosave plan for all three metal types from as low as $0.10 per day. And it only takes 3 minutes on your mobile phone. Pause anytime with no penalties and physical redemption is as easy as selecting the physical item and checking it out! You now have the power to set up a diversified and customized portfolio at very low costs.
So that’s it, quick and simple tips on how to maximize your children’s hongbaos. After all, the real huat starts with not buying 4D but by making smarter day-to-day personal finance decisions for your future!
Jason
Happy Chinese New Year Everyone!
It is the festive time of the year to receive and giving out little red envelopes. These little red envelopes are called “Hong Bao” 红包 in Mandarin, “Ang Bao” in Singapore and “Lai See” in Cantonese. The money inside is called “压岁钱”, which is also known as “lucky money” or New Year’s money.
Saving your “lucky money” by accumulating precious metals holdings
“When you have nowhere to spend, don’t spend on handbags, invest in GSAP”
There is no better time to start the habit of saving and investing money at a regular basis than at Chinese New Year because you have a good sum of extra cash to get started.
Saving for the future instead of spending right away is a good way to start. Time to stop spending your ang bao money on things that you do not actually need. Try saving and accumulating with our GSC Savings Accumulation Program (GSAP) instead. Let your “lucky money” work harder by investing in GSAP!
Below is a summary how GSAP works:
- Accumulate min. $100 per month.
- Minimum period to commit: 1 cycle (3 months)
- Accumulate daily on business days based on GSC 10am reference price automatically.
- You may refer to the 10am reference price through our website.
- Helps the client buy more when prices are low and less when prices are high.
- Dollar Cost Averaging method.
- Upon the maturity of the savings plan, clients can choose to take physical delivery of your accumulated holdings or sell to encash it.
- The only cost incurred is the storage charges of 2.5% per annum. It will be calculated daily as your holdings increase day by day. (Based on 10am reference price as well)
- The storage charges will be debited from your accumulated holdings on the 1st business day of the following month.
“You may decide to indulge when you have won the fight,
but don’t forget GSAP when the time is right.”
The right time is here. Contact us if you have any other enquires or you may also sign up through the form here!
Cheryl
We believe there are many people out there who are interested in precious metals and wish to start investing with something small in the initial phase. However, the question is “How?”?
The GSC Savings and Accumulation Program (GSAP) allows you to save using dollar cost averaging where you can start investing with a small amount at initial stage. This also allows you the flexibility to increase your accumulation on months where you have more liquidity on hand.
Let us share more on how GSAP works. GSAP helps to automatically accumulate your choice/s of precious metals daily. The automatic purchase will only be executed during GSC’s business days.
For example, if there are 20 business days in a month, the $100 will be divided in 20 days.
Based on 10am reference price, which is captured via algorithms automatically and displayed on our website daily after 10am, we will automatically purchase $5 worth of your choice/s of precious metals every business day. This helps the client to accumulate more when prices are low and less when prices are high. This is called Dollar Cost Averaging. This way, clients will not have to worry about price fluctuations or when would be the best time to purchase.
Upon the maturity of the savings accumulation plan, clients can also choose to take physical delivery of their accumulated precious metals. Clients can choose to take delivery of physical bullion, coins or even jewellery from our store. Of course, you can also opt to sell off your accumulated holdings if you do not wish to swap them for physical precious metals.
“What if I wish to start saving on precious metals during middle of the month/ any day of the month? Can I? How does it work?”
Sure, you can! For example, if you wish to start accumulation in the middle of the month with only 10 business days remaining, the $100 will be divided into 10 days. Which means we will automatically purchase $10 worth of your choice of precious metals on the remaining business days.
There is only one cost called the storage cost. It is 2.5% per annum and it will be calculated daily as your holdings increase day by day. The estimated storage cost for $100 accumulation is less than 1cent per day during the initial accumulation. As your holdings increases over time, the storage amount will then increase.
GSAP is hassle free and suitable for anyone who wants to accumulate their Precious Metals in physical Gold, Silver and Platinum.
Please feel free to contact us for more details or visit us at www.goldsilvercentral.com.sg.
Cheryl
Dollar cost averaging is an investment strategy where you divide a total amount to be invested by the standard periodic purchases of a targeted asset. In other words, you are spacing out the intervals of your investment instead of committing to one larger amount. Avoiding the risk of making poorly timed decisions especially when the market is not in your favor. The key attribute to this strategy is the smoothening of investment risk. Lowering the risk and cost of wealth saving accumulation.
You can find plenty of similar offerings in the market, but have you heard of a precious metal accumulation plan? Yes! GoldSilver Central is offering the Savings Accumulation Program (GSAP), a metal accumulation method based on dollar cost averaging. For any increment of 100SGD or more per month you can start accumulating your savings in Gold, Silver or Platinum in your account.
Dollar cost averaging is suitable for highly volatile market such as Gold, Silver and Platinum. Fluctuations in pricing causes market uncertainly. By spacing out the accumulation, you are buying more when prices are lower and buying less when prices are high.
The flexibility of starting from as low as 100SGD per month is suitable for anyone who would like to start small. What this also means is if you feel comfortable, you can always opt to save more every month. Suitable for the young as a savings plan and also to institutional investors who are interested in the acquirement of precious metals over time 
The process is fully automated and no actions are required from you. Our system will proceed to execute daily based on the GSC 10AM Reference Price which you can find them at the top on our website. A statement with your accumulated holdings will be sent to you at the end of each accumulation month. We do the work so you can focus on what’s more important to you.
