[Timing it or Auto Investing]

When there's a market pullback, like the recent one last year, there's always this question of whether it's better to time the investment or to auto invest in it. Here are some of my thoughts that I hope will help you think clearer before pressing that "buy" button.

Timing it

The case for timing an investment is simple. Buy low and sell high. However, things gets complicated when reality sets in.

How low is low? Nobody can time the market bottom. Also, when the bears are in big time, not many will have the guts to jump in. What if the investment or trade is a mistake?

The case for timing the market is that many successful investors have done so. (Not saying you or I will be. Beware of survivorship bias.) Also, we can fix the percent drop before investing. Like -10%, -20%, -40%, -60% etc. Portfolio sizing and investing only what you can afford to possibly lose will also help in terms of managing the emotions.

All in all, my opinion is not to time the market especially if you are a newbie investor, or not invested in some major market crashes in your lifetime.

Auto-investing

Auto investing is a wonderful tool for DCA. If you don't understand DCA, don't auto invest. The pros of Auto investing include having a reasonably good positive investment growth of mid to high single digits to low double digit growth in your portfolio over a long run. Yes long run of 10-20 years. Auto investing takes out the emotions and also removes the time needed to constantly check in on your companies regularly.

The downsides however, might be unavailable for some. Auto investing in multiple times involves paying transactional costs multiple times and these frictional costs can add up sizably over a long time horizon. Also, you still need to do your homework. Be it value investing or technical analysis or valuation etc. Auto investing into a meme stock or a Red Sea business might just accelerate the death of your hard earned money.

So how?

Personally my suggestion will be as follows: 

1. Invest in educating yourself first. Invest in time in understanding your own investment philosophy or trading strategy first. Don't understand yourself? Then invest in a small amount in the market. Nothing beats skin in the game. Not enough money? Go save first.

2. Invest in Auto investing in large ETFs or mutual funds like $S&P 500(.SPX)$ , $Invesco NASDAQ 100 ETF(QQQM)$ or Dimensional funds. But you need you understand what you are doing and not follow me ya. DYODD.

3. Invest in Auto investing in sectors or areas within your circle of competency. If you work in a supermarket and know the industry well, $SHENG SIONG GROUP LTD.(SHSGF)$  might be a good option. (Not a recommendation, just an example.) Or if you work in banking sector, you might like $DBS GROUP HOLDINGS LTD(D05.SI)$ . 

4. Once you are more competent, then consider auto investing in individual stocks. Do you know their revenue trend, operating margins, strategy, competition, absolute and relative margins? ROIC, WACC, EPS, Op Income, Management, risks and potential upside? If you can't stomach all these, don't go here.

5. Finally the most risky will be doing lump sum investing. Aka timing the market. This is only for those who are more seasoned and have some battle scars to prove it.

So far I am doing both DCAing and lump sum and my lump sum is beating my DCA. [Grin]  Will I switch all over to one strategy? Nope. There's a place for everything.

Meanwhile for all Singaporeans, enjoy your holiday and vote wisely. May the best man win!

@TigerStars @MillionaireTiger @CaptainTiger @Bonta @daz88888888 @LMSunshine @GoodLife99 @melson @SirBahamut