A very thin line separates investing in the stock market and outright gambling. However, real investors are not about being winners or losers. It's all about discipline.

There are many ways to be disciplined in investing. Investors can do it on their own, though as a matter of fact not many investors manage to follow their regular investment plan.

If investors cannot practise self-control over their investment behaviour, they may need to seek extra help from asset-management companies or brokerages.

Many asset-management firms offer a dollar-cost-averaging (DCA) investment programme to apply to their mutual funds.

DCA is the periodic investment of a fixed dollar amount, in a particular stock or fund or in the market as a whole, in the belief that the average value of the investment will rise over time and that it is not possible to foresee the intermediate highs and lows.

In plain English, investors just choose the fund, date and amount of money they want to invest. Then every month, the amount of money stipulated by the investors will be invested regularly on the date and to the fund selected by the investors.

By this method, investors will buy units at the average price. The upside or downside will depend on the fund's performance.

Recently an option has been made available for investing directly in equities through the DCA programme.

Sicco Securities offers a monthly stock-investment programme called Easy Wealth Builder.

What is it?

Easy Wealth Builder is a programme that applies the dollar cost averaging technique.

How does it work?

It is similar to buying a mutual fund with the DCA programme. Investors pick stocks in the SET50 Index that they want to invest in. Then they have to specify the date that the money will be invested. In this case, investors can invest on the 5th, 15th or 25th of each month. Last but not least, investors have to specify the amount of investment.

The minimum investment is Bt1,000. The firm will charge 0.25 per cent of the trading value or at least Bt50 pre-tax per transaction. Shown in the table is the average return over the past three years. Out of the 50 stocks in the SET50, 31 generated consistent positive returns.

Picking the stocks to invest in via this DCA depends on each investor's decision.

Who should you use this programme?

Siripong Sutharoj, managing director and CEO of Sicco Securities, suggests that beginners in stock investing are the most welcome as the programme will little by little educate those who have no experience in stock investing to be good investors.

Those who are familiar with stock investing but are too busy to manage their own portfolio are also welcome.

What will happen if the market goes up or down?

Investors will receive the number of real shares following the amount of money invested as if they had directly bought shares. If the price of stocks that the investors hold goes up, the value of investors' shares consequently goes up. It will happen in reverse when the stock price goes down.

How long does it take to build wealth from this programme?

It has always been a problem for investors to decide when to hold, buy or sell stocks. The DCA may help investors about when to buy. How about the right time to sell?

Some stock gurus draw up their own risk frame. They set the percentage of gain and loss they can take. For example, former finance minister Thanong Bidaya limits his risk to 30 per cent within one year. Thanong says that if the value of his stocks rises or falls 30 per cent, he'll sell. Within one year if the value does not touch the 30-per-cent breaker, he will settle that stock anyway.

Siripong suggests that those who use DCA should sell when they want to use the money. However, to use DCA, investors should be consistently disciplined about putting their money in for the long term, passing through at least two market cycles.

Is there any benefit apart from the expected gain?

As shareholders, investors will receive dividends if the stock they hold can afford to pay dividends.

What needs to be considered?

Discipline is the key, but the money to inject regularly is more important. As the stock market is volatile, money to invest in securities must be free from any obligation. Siripong said investors must make sure that they do not need to use the money invested in this programme in the short run. Borrowing money from others to invest in this programme is not an option. Starting with an amount of money that will not put investors in any financial trouble if the investment turns sour makes common sense.

As always, asset allocation is the key to managing risk. DCA is one of the tools. There are many types of mutual fund and investment tools to diversify risk. All investors need is discipline.

Piyarat Setthasiriphaiboon

The Nation