Two common ways I can suggest are:-
- Keep it in Saving Account (and grow it to a bigger size before invest)
- Invest in a mutual fund on regular top up basis
You may have a lump sum investment later but it takes 3 years to reach a significant RM10,000
With this method, you may be missing lots of good investment timing.
Assuming you know well about how to invest "right" in mutual fund , invest regularly is actually applying dollar-cost-averaging (DCA) method i.e. you buy regardless the price is up or the price is down. DCA is a good strategy for investor with a lower risk tolerance.
However, I just learnt today that there is another method of regular-saving-investment is called "VALUE-AVERAGING" that suppose to be better as it covers the pitfalls of DCA
The key features of Value-Averaging are:
- A more active way of investment (as compared to DCA which is more suitable for passive investing or investor with no time / knowledge about the investment)
- Invest more when the share price falls
- Invest less when the share price rises
Probably you can employ Value-Averaging method after you have save for 2 to 3 years under Method 1 to accumulate a lump sum.
Later, will share more about another technique in Execution called "Sum of Digits Laddering"!