Daily Tsumetate

[adamu]

I saw that, TBS

I do not necessarily agree with the sentiment in that thread, that getting the funds into the market as soon as possible is the best option. For a long-term tsumitate investment, purchasing the most number of units possible is the goal. Buying as soon as possible (i.e. 1st of each month) is only the best result if the unit price increases every day without fail. As we know, the price fluctuates daily, so it is an exercise in luck whether the day one purchases on will be the cheapest day of the month.

If you have the cash up front, sure. Lump sum vs dca.

That's a good way to frame it: It's essentially a DCA vs lump sum question.

Here's the (Bogleheads) wiki about that:

Lump sum investing will always carry a higher expected return, because it immediately moves your funds from asset classes with lower expected returns to ones with higher expected returns. Note that higher expected returns do not guarantee that your actual returns will be higher.

There's also the infamous Vanguard report that found Lump sum performed better historically 2/3 of the time, although they were analysing a single lump sum vs monthly, not regular daily investments vs monthly investents, and only over a specific time period in specific markets.

[RetireJapan]

"it immediately moves your funds from asset classes with lower expected returns to ones with higher expected returns"

Wow, I love this. I have never framed it in that way before, but it makes so much sense.

Going to appropriate that going forward

[TokyoBoglehead]

Ultimately I cancelled my daily tsumitate. It was an interesting feature, but I did not like the way the sweep schedule worked.

I ended up mothballing my Monex account, as all my taxable purchases will eventually need to be sold to fund the 新しいNISA. So I've centralized most purchases in Rakuten, where my NISA is.

The KISS principle wins out in the end.

[TBS]

There's also the infamous Vanguard report that found Lump sum performed better historically 2/3 of the time, although they were analysing a single lump sum vs monthly, not regular daily investments vs monthly investents...

Investing monthly straight away vs spreading it out daily as AussiePete proposed is a simple extension of the LS vs DCA case in the Vanguard report. In fact, the former is worse. With the latter there's a 1 in 3 chance of getting lucky. But with the former, over the long run things will regress to the mean. The daily tsumitate buyer will end up buying units on average 0.3~0.4% more expensively than someone who invests straight away each month.

[beanhead]

I was just looking at the Monex page and they have a simulation of daily tsumitate vs monthly to compare the two.

https://info.monex.co.jp/fund/guide/eve ... tml#page03

I must be missing something but they seem to be comparing 500yen per day with 10,000yen per month. Even if the daily purchase is only trading days so 20 per month instead of 30, I don't quite understand the logic and how the invested amount (about 1.8M) in their simulation is the same.
Any ideas?

[adamu]

I was just looking at the Monex page and they have a simulation of daily tsumitate vs monthly to compare the two.

https://info.monex.co.jp/fund/guide/eve ... tml#page03

I must be missing something but they seem to be comparing 500yen per day with 10,000yen per month. Even if the daily purchase is only trading days so 20 per month instead of 30, I don't quite understand the logic and how the invested amount (about 1.8M) in their simulation is the same.
Any ideas?

The calculation seems to be
500 x 3666 days = 183.3万
10000 x 180 months = 180万

But 3666 days is 10 years, not 15. However they do say that there are about 20 purchases a month, not every day, and 20 days * 12 months * 15 years is 3600 days, so it checks out, sort of.

Seems like a lot of complexity for basically the equivalent of investing 10k/month to me.

Also, that is just one 15-year period. They need to back test against a bunch of different periods like the Vanguard report, rather than just selecting one that comes out a tiny bit better on the daily side.

Doesn't Takekawa write blogs for Monex? I wonder what she would have to say

[TBS]

Also, that is just one 15-year period. They need to back test against a bunch of different periods like the Vanguard report, rather than just selecting one that comes out a tiny bit better on the daily side.

Doesn't Takekawa write blogs for Monex? I wonder what she would have to say

It is all marketing smoke & mirrors.

In the example the monthly investment occurs at the end of the month, so after all but one of the daily investments made during the month.

TLDR they engineered an example to make daily tsumitate seem better, by artificially choosing a disadvantageous way of structuring the monthly tsumitate investments.

More in the other thread here.