Everyone answers that in their head. Almost nobody has watched what each answer costs. Dave and Amanda bought the same fund, on the same day, at the same price. Then the price moved. One kept buying. The other stopped and waited. Press play, watch twelve years, then move the price yourself and see if your answer still holds.
Straight talk before you start: every number here is made up to teach one idea. It is not a forecast, not a record of any real fund, and not a promise. Real funds lose money — and a real fund can stay down longer than this one does.
Picture a shop lot worth RM300,000. Too much for one person, so a thousand people buy it together at RM300 each. Your RM300 slice is one unit. A unit trust works the same way, except the shop lot is a pile of shares in many companies — the same way your ASB statement counts units, not ringgit. The price of one unit is posted fresh every day. Money comes back to you in exactly two ways.
More people want the shop lot, so every slice is worth more than you paid. Nothing reaches your bank account until you sell. Until then it is profit on paper.
Someone rents the shop lot. After the bills, what is left is split between all thousand owners. That share is a dividend: cash, paid on every unit you hold, whether the price is up or down. It is never promised — in a thin year it shrinks, or there is none. More units, bigger cheque. Hold that thought.
Three charts, one timeline. The fund price on top, what each person's money is actually worth in the middle, and the dividend cheque each of them collects at the bottom. Every setting below is yours to change.
The solid line is the price of one unit. Each dot is a year someone bought. The two dotted lines are what each of them has paid per unit on average — once the price is above your own dotted line, you are in profit.
Both start on the same day, with the same money, at the same price.
Dave is the solid line, Amanda the dashed one; each shows their units plus the dividends they have banked. The faint stepped line behind each is the money they put in — where their curve rises above their own step line, they are ahead.
Paid on every unit held that year — so the bar grows as the number of units grows. Dave's bar is on the left of each year, Amanda's on the right.
| Year | Price | Dave | Amanda | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Units | Money in | Worth | Dividend | Units | Money in | Worth | Dividend | ||
It is not luck and it is not timing. It comes down to three plain things, and you can see all three in the numbers above.
At 50 sen, one ringgit buys you two units. At 28 sen, that same ringgit buys three and a half. Nothing about the money changed — only the price tag. A falling price is not just a loss on your statement. It is also a bigger scoop.
Buy only once and your average is locked at whatever you paid that day — the price has to climb all the way back to that number before you even break even. Every later purchase at a lower price drags the average down, and the bar you have to clear comes down with it. That is why two people holding the very same fund get back into profit in different years.
Dividends are paid per unit you hold, not per ringgit you put in. Look at chart 3 — Dave's bar pulls away from Amanda's in year 3 and never comes back. Those cheap units keep paying him every year, including the bad years while he waits for the price to recover.
Dollar-cost averaging — purata kos ringgit — just means putting in the same amount of money at the same time every month or year, whatever the price happens to be that day. You are not trying to guess the bottom. You simply keep buying.
It works because of arithmetic, not cleverness. A unit trust is priced per unit, and that price is the NAV — net asset value, what one unit is worth. When the NAV falls, your same RM500 buys more units. When it rises, it buys fewer. Over time your average cost per unit lands below the average price, because more of your money went in at the cheap prices.
That is why it suits anyone investing from a monthly salary: the discipline is automatic, and the months that feel worst are the months doing the most work. The simulator above lets you watch that happen year by year, and lets you change the price path so you can see when it fails as well as when it works.
The one condition: it only pays off if the fund recovers. Buying more on the way down rescues a temporary fall. It does not rescue a fund that keeps sliding forever — try the "Never recovers" path above and you will see the difference.
Investing a fixed amount on a fixed schedule — say RM500 every month — into the same fund, without trying to time the market. Because the unit price moves, that fixed amount buys a different number of units each time: more units when the price is down, fewer when it is up. Your average cost per unit ends up lower than the average price over the period.
Adding more while the price is below your average cost pulls that average down, so the fund has less ground to make up before you break even. In the simulator, topping up when you are 20% down turns a +80% result into +142% on the same fund over the same twelve years. But this only works if the fund recovers, and only if the money you add is money you genuinely do not need soon.
No. NAV means net asset value — the price of one unit. A fund at 28 sen a unit is not "cheaper" than one at RM1.00; you simply get more, smaller slices of the same size of cake. RM10,000 buys you the same RM10,000 of the fund either way. What matters is whether the NAV is low compared with what that fund was worth before, which is what this simulator shows.
A Malaysian equity unit trust typically charges around a 5% sales charge on every ringgit you put in, plus roughly a 1.5% management fee each year. Press "Add typical Malaysian fees" in the simulator to switch both on: the same twelve years drop from +142% to about +98%, and the buy-once investor from +80% to about +43%. Fees are not a rounding error.
No. A fund distributes part of what it earns, and in a poor year it can pay less or nothing at all. Note too that on the day a distribution is paid, the unit price drops by that amount — the money moves out of the fund to you rather than being added on top. Use the "Falls with the fund" setting in the simulator to see the realistic version, where the payout shrinks as the fund shrinks.
No, and the difference matters. ASB is fixed at RM1.00 a unit, so its price never falls — there is no cheaper price to buy into, and the whole idea on this page does not apply to it. This simulator is about funds whose unit price moves daily, such as equity and balanced unit trusts. If your money is entirely in ASB, none of this changes what you should do.
Want the forward-looking version instead? The DCA Calculator projects what a monthly amount could grow into. This page looks backwards at how behaviour during a crash changes the outcome.