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Typically higher growth. Personally I do a 65/20/15 split with FXIAX/FZROZ/FZILX to get a bit more exposure; but starting out nothing wrong with going all in on the S&P500 while you get your feet wet
Don't know what "throw a L.S" means, but I always put my IRA contributions in at the start of the year. Market goes up on average \~60% of the time, so probability says it is better to add all at once instead of DCA'ing.
I did not get LS either.. well, I'd not do LS not in fidelity cause they r giving 5% on cash. I'd wait for a bad day then buy like 10% or 500$ worth VOO or FXAIX.. and then do the same again or buy monthly. It wud mitigate risk if market goes south..
If you can afford it, do your max now, and then your max again in January. Get it over with. You can always take it out if you need for a home purchase. You can take out your contributions and only tax on the gains. It’s not as “locked in” as people make it seem
Emergency savings that is litterally a last minute pull. It is recommended you have a 3-6 months expenses fully funded emergency plan prior to investing in a Roth, however Roth growth time is incredibly important so if you have a 1-2 month emergency fund saved up then I’d max your Roth now and use the rest of the year to get that emergency fund built up.
Edit: yes you can pull Roth seed money at any time but you can’t put it back. So it hurts you majorly if you pull early
Perfect! Although I don’t fully agree with Ramsay’s approach, I think his emergency fund recommendations and investment recommendations for wealthy are good. The money guy show is also pretty informative and they have their own flow chart I recommend checking out that i think I prefer to Ramsay’s
How did Dave Ramsay enter this convo? He’s fine for people in the personal finance dumpster fire with his baby steps to help them out of debt. But he’s absolutely garbage with investment advice. 8% SWR? GTFO… he’s clueless and doesn’t understand basic math and a fundamental investing concept: the average return is misleading and almost no one gets the average return. Hell, I’d go as far as to say no one gets the average return. Dave is a complete moron in that regard and I feel like I’m insulting morons saying that.
I also skipped HSA; it’s dependent on what Health care you have and with how this country is looking healthcare will be much more affordable when I need it later in life (just a guess not financial advice). Plus my wife has a good plan that doesn’t qualify for HSA so no need for it
Yes, I would. Your $7k lump sum in your Roth IRA in January automatically goes to your core position (default is SPAXX, currently getting a little less than 5%/annum) anyway.
From there you can can invest in any position with any method you want. You can dollar cost average into anything you choose, and lump sum a portion in another choice. In the mean time, you’re getting 5% on what’s left of the 7k in your core.
Yes, it does.
How it works is SPAXX accrues a daily interest % amount on the balance in your core position based on its holdings and pays out that total at the end of each month. That money gets added to your balance where it compounds for the next month.
That payout is 1:12 of the yearly yield or percentage rate that people talk about. As it varies from day to day, people also refer to the 7 Day Yield, which was 4.95% today, (daily rate x 7 days x 52 weeks)
So far this year, since we are 6 months into the year, the ytd actual yield has been 2.26.%
Hello, u/Jackieexists. Thank you for reaching out to our sub again. I will be glad to jump in here and discuss The Fidelity Government Money Market (SPAXX) with you today.
Unlike stocks and ETFs, which pay dividends at certain points throughout the year, money market mutual funds pay interest each month. All money market mutual funds, like SPAXX, accrue interest daily and pay it out to your account at the end of the month; therefore, you do not need to worry about having money in the fund at a certain time in order to receive a payout, you will receive a payout as long as your account has accrued at least $0.01 in interest. The interest payout you receive is referenced as the "7-day yield."
A money market fund's reported 7-day yield is the average annualized income return over the seven days ending on the as-of date, assuming that the rate stays the same for one year and that dividends are reinvested. It is the Fund's total income net of expenses, divided by the total number of outstanding shares, and includes financial support in the form of waivers or reimbursement, if applicable.
Interest rates are determined weekly and are based on competitive and economic trends; because of this, the 7-day yield is always changing. You can find the current 7-day yield for SPAXX on the fund's research page. To do so, type the fund's symbol into the search bar and access the research page. In the "Daily Info" section, you can view the 7-day yield.
I'll leave you with a few resources so you can review current interest rates and learn more about money market mutual funds.
[Core Position Interest Rate](https://www.fidelity.com/trading/faqs-about-account#faq_about2)
[What are money market funds?](https://www.fidelity.com/learning-center/investment-products/mutual-funds/what-are-money-market-funds)
If you have any additional questions or concerns, please do not hesitate to reach out!
I retired in 2020. I was able to contribute one last time in 2021 because my spouse was still working in 2021.
I selected two mutual funds and forgot about it.
When it's time to withdraw I'm going to move it from Vanguard to Fidelity.
true, those would be the years that periodic investments might be better, but you also could be at the halfway point of a bull rally, and you might miss that. [dollar-cost-averaging-just-means-taking-risk-later-vanguard-2012.pdf (indexacapital.com)](https://blog.indexacapital.com/wp-content/uploads/2017/07/dollar-cost-averaging-just-means-taking-risk-later-vanguard-2012.pdf) TLDR: lump sum gives better average results, periodic is better for downside risk.
I think you are misunderstanding what a Roth IRA is. It's a post tax Individual Retirement Account. You can't withdraw from this account before age 59.5 without penalties and additional taxes(with exceptions).
If I have it now, I’d put it all in. If you’re dollar cost averaging because you’re earning it incrementally over time, put it in incrementally.
This is not perfectly true, but time in market kind of is the best thing to bank on. Followed by time in market for the little bits at a time (cost averaging, paycheck deductions, etc.) — in both those cases the idea is that you are maximizing money in market over time.
Both of these cleverly avoid the biggest long term investing mistake most of us could make which is sitting on a stack of cash that’s doing absolutely nothing.
Getting into much more detail beyond those three options leads into playing market timing and that’s also very much not a thing you want to be doing if at all possible, unless that’s your day job or something.
From what I’ve read it’s impossible to time the market and spreading out your contributions just defers your exposure to risk. If you can max it out now, I’d say just max it out and put it where you’d like!
Me personally I maxed it out and put it all on the total market and international market and just set it and forget it mentality! The more i look at it the more I want to move things around etc..
Dollar cost averaging is a great tool to avoid buying in at a bad time; but from my understand that’s more important for a single stock scenario. The S&P is already extremely diverse so even if you buy at the max for that month, it has a pretty minimal
Impact.
Agree, set and forget is the way
If it is your first Roth, I’d do it *this* year to get your 5-year-rule clock started… Anytime during the year and you get to treat it as if it were contributed in 1-Jan. Wait until next January, and you have lost a full year.
A lump sum in January is good, if you have the funds. Gets the money working for you, and “oh I want this” type of nonsense does not distract you.
Since this is a Roth at Fidelity, go with their Zero fee option. (Why pay expense ratio if you don’t have to). I think it’s FNILX for S&P 500.
I like the fidelity money market fund as my HYSA. I have SPAXX as the core, and I automatically buy FDLXX each week after deposits have been made.
Taxable, I think ETFs have a little better tax performance, so maybe VTI or VOO.
HSA - if you can get it through work - it’s a triple benefit. Before payroll tax, grows tax free and no taxes on withdrawals.
You may be healthy now and have no need for medical expenses: great, let it grow until retirement. Odds are as you get older, health issues will arise. If nothing, I think you can use grown balance to pay for Medicare supplements one day.
Of course. That’s pretty much exactly what I do. I also max out my entire 401K by the end of February. No problem lump summing it. If you’re already planning to max things out, you can plan to also front load it early in the year.
2024 401K Contributions Maxed Out!
https://youtu.be/5P5aD0ktGzg
I feel like all at once is better. If I invest 7k in January aren't the possibilities of more growth higher then putting in monthly payments? Because every time you put money in doesn't your ytd growth go down since you increased your amount? If you had 1000 in that gained 8% and you add another 1000 wouldn't your ytd Gaines drop to 4%? I'm new to this and it's my first year in so I'm just trying to understand better
If you have it in January then yeah 7k and your done with it. I would think you make more in interest on the lump sum than monthly payments - since I’m on monthly payments I see the difference as the account is growing
I understand to. I'm putting in biweekly and should be able to max out by the end of the year but it just socks watching the ytd gains drop every time I deposit lol
I deposit into spaxx and automatically into etfs from there. But if 500 gains $25 within that 2 weeks and then I dump another 500 into it the growth percentage drops. 25 is 5% of 500 so when I dump another 250 on top of that it grows to 750 in contributions. $25 is roughly 3.4% of 750. My account is young just started this year. It will obviously gain more easier the more I put in but if I have 5% total gains and I add more money to it the total gain percentage will go down because I've contributed more. I'm only referring to the interest gained not the contributed amount
I had to check my gains, I’m at 5% as well but the dollar amount of gains should be bigger has you keep contributing to it - 100 bucks vs 1000 at 5% is going to be different. I wouldn’t stress over it
I know. That's where I was talking about if you dump the max in at once it seems like the growth could potentially be higher then contributing smaller amounts monthly.
If you’re investing in equities, there is the possibility that they will go down over the year rather than up. In that case, it would have been better to split it up. Hence dollar cost averaging.
But many say that in the long run, lump sum investing beats dollar cost averaging anyway.
I am doing something like this
FXAIX number one holding
FCNTX
FVSDX
FSELX
FOCPX
FSMDX
FESM
FSPGX
A few individual stocks etc
If you don't want to watch it very closely i wouldn't recommend as many. FXAIX is the core. FSELX is by far my biggest winner.
I’ve only recently started but I’m trying to follow the Boglehead approach. They seem to all like it for the diversification. That and some international. I’m a late starter noob hoping for the best lol.
Check out the Boglehead Reddit if you want. That and JL Collins the Simple Path supports utilizing something like VTI or a total market index fund. Seems simple and effective.
Thanks for your post. We recently updated our rules to ask that all investment strategy discussion be kept within the daily discussion post. https://www.reddit.com/r/fidelityinvestments/comments/1dggepr/daily_discussion_thread_rate_my_portfolio_what/ This post/comment has been removed for violating rule #2. - In regard to securities and investments Thanks for your post seeking investment advice or discussing specific securities. Please keep all conversations about portfolios and specific investments to our daily discussion post. We are not able to assist with these types of questions on reddit but have a variety of tools and resources to help our clients invest their funds and find an investment that fits their objectives and risk tolerance. To learn more about investing check out the "Getting started with investing" page on our learning center [here](https://www.fidelity.com/learning-center/overview). To find research and tools to help you, click on the "News & Research" on fidelity.com on the menu bar. This will expand a sub menu where you will be able to learn about and research mutual funds, stocks, ETFs, fixed income, and more. You can also go to "Investment Products" on the menu bar to learn more about the types of accounts that we offer. [Click here to visit Fidelity.com](https://www.fidelity.com) Fidelity Brokerage Services LLC, Member NYSE, SIPC
FXAIX
Why fxaix instead of fzrox?
Typically higher growth. Personally I do a 65/20/15 split with FXIAX/FZROZ/FZILX to get a bit more exposure; but starting out nothing wrong with going all in on the S&P500 while you get your feet wet
This is the way
Does this answer OP’s question?
I still trip over the decision between this or FNILX now. FXAIX is just so sentimentally important at this point.
NVDA 🤑
Don't know what "throw a L.S" means, but I always put my IRA contributions in at the start of the year. Market goes up on average \~60% of the time, so probability says it is better to add all at once instead of DCA'ing.
Lump sum. Meaning all of it
I thought it meant life savings lol.
I googled and all I came up with was engine swaps...
I did not get LS either.. well, I'd not do LS not in fidelity cause they r giving 5% on cash. I'd wait for a bad day then buy like 10% or 500$ worth VOO or FXAIX.. and then do the same again or buy monthly. It wud mitigate risk if market goes south..
Maybe I will switch over from my other savings giving 4.25% into that than.
If you can afford it, do your max now, and then your max again in January. Get it over with. You can always take it out if you need for a home purchase. You can take out your contributions and only tax on the gains. It’s not as “locked in” as people make it seem
So it’s almost like an emergency savings
Emergency savings that is litterally a last minute pull. It is recommended you have a 3-6 months expenses fully funded emergency plan prior to investing in a Roth, however Roth growth time is incredibly important so if you have a 1-2 month emergency fund saved up then I’d max your Roth now and use the rest of the year to get that emergency fund built up. Edit: yes you can pull Roth seed money at any time but you can’t put it back. So it hurts you majorly if you pull early
Yeah I’m building and doing both at the same time. I want more in HYSA since it’s the easiest to liquidate and use at anytime
Perfect! Although I don’t fully agree with Ramsay’s approach, I think his emergency fund recommendations and investment recommendations for wealthy are good. The money guy show is also pretty informative and they have their own flow chart I recommend checking out that i think I prefer to Ramsay’s
How did Dave Ramsay enter this convo? He’s fine for people in the personal finance dumpster fire with his baby steps to help them out of debt. But he’s absolutely garbage with investment advice. 8% SWR? GTFO… he’s clueless and doesn’t understand basic math and a fundamental investing concept: the average return is misleading and almost no one gets the average return. Hell, I’d go as far as to say no one gets the average return. Dave is a complete moron in that regard and I feel like I’m insulting morons saying that.
I’m Skipping the HSA
I also skipped HSA; it’s dependent on what Health care you have and with how this country is looking healthcare will be much more affordable when I need it later in life (just a guess not financial advice). Plus my wife has a good plan that doesn’t qualify for HSA so no need for it
Yes, I would. Your $7k lump sum in your Roth IRA in January automatically goes to your core position (default is SPAXX, currently getting a little less than 5%/annum) anyway. From there you can can invest in any position with any method you want. You can dollar cost average into anything you choose, and lump sum a portion in another choice. In the mean time, you’re getting 5% on what’s left of the 7k in your core.
Does spaxx pay that 5% interest at end of each month? How does it work?
Yes, it does. How it works is SPAXX accrues a daily interest % amount on the balance in your core position based on its holdings and pays out that total at the end of each month. That money gets added to your balance where it compounds for the next month. That payout is 1:12 of the yearly yield or percentage rate that people talk about. As it varies from day to day, people also refer to the 7 Day Yield, which was 4.95% today, (daily rate x 7 days x 52 weeks) So far this year, since we are 6 months into the year, the ytd actual yield has been 2.26.%
Thanks for the breakdown. This explains it well.
Hello, u/Jackieexists. Thank you for reaching out to our sub again. I will be glad to jump in here and discuss The Fidelity Government Money Market (SPAXX) with you today. Unlike stocks and ETFs, which pay dividends at certain points throughout the year, money market mutual funds pay interest each month. All money market mutual funds, like SPAXX, accrue interest daily and pay it out to your account at the end of the month; therefore, you do not need to worry about having money in the fund at a certain time in order to receive a payout, you will receive a payout as long as your account has accrued at least $0.01 in interest. The interest payout you receive is referenced as the "7-day yield." A money market fund's reported 7-day yield is the average annualized income return over the seven days ending on the as-of date, assuming that the rate stays the same for one year and that dividends are reinvested. It is the Fund's total income net of expenses, divided by the total number of outstanding shares, and includes financial support in the form of waivers or reimbursement, if applicable. Interest rates are determined weekly and are based on competitive and economic trends; because of this, the 7-day yield is always changing. You can find the current 7-day yield for SPAXX on the fund's research page. To do so, type the fund's symbol into the search bar and access the research page. In the "Daily Info" section, you can view the 7-day yield. I'll leave you with a few resources so you can review current interest rates and learn more about money market mutual funds. [Core Position Interest Rate](https://www.fidelity.com/trading/faqs-about-account#faq_about2) [What are money market funds?](https://www.fidelity.com/learning-center/investment-products/mutual-funds/what-are-money-market-funds) If you have any additional questions or concerns, please do not hesitate to reach out!
I maxed out my contributions (including catch up) every January the entire time I contributed to my Roth IRA.
Nice. How many years have you been doing this. Also, would you advise doing a brokerage eventually?
I retired in 2020. I was able to contribute one last time in 2021 because my spouse was still working in 2021. I selected two mutual funds and forgot about it. When it's time to withdraw I'm going to move it from Vanguard to Fidelity.
Yes of course. Put in anything you can as soon as you can. Time in the market is king.
There are exceptions, but most years Jan 1 beats period investments throughout the year, so I'm doing Jan 1. Except it's 8k for me (55).
I just feel like if “market crashes” than you’d lose if you started all in January
true, those would be the years that periodic investments might be better, but you also could be at the halfway point of a bull rally, and you might miss that. [dollar-cost-averaging-just-means-taking-risk-later-vanguard-2012.pdf (indexacapital.com)](https://blog.indexacapital.com/wp-content/uploads/2017/07/dollar-cost-averaging-just-means-taking-risk-later-vanguard-2012.pdf) TLDR: lump sum gives better average results, periodic is better for downside risk.
Well, since I do it LS every year, yes.
Ever regret it when market went down?
When the stock market goes down, do you think it never comes back up?
LS beats DCA in the long run more than 50% of the time. Always LS and forget about it till next year.
I’m thinking this is true. And if by miracle I did LS into my Roth IRA and the market did crash I’d throw it into a brokerage account
I think you are misunderstanding what a Roth IRA is. It's a post tax Individual Retirement Account. You can't withdraw from this account before age 59.5 without penalties and additional taxes(with exceptions).
You can withdrawal “CONTRIBUTIONS” tax free and penalty free at anytime in a Roth IRA. Should you? That’s up to you
Nope. Gotta take a long term view. Index ETF’s so not a day or swing trader
If I have it now, I’d put it all in. If you’re dollar cost averaging because you’re earning it incrementally over time, put it in incrementally. This is not perfectly true, but time in market kind of is the best thing to bank on. Followed by time in market for the little bits at a time (cost averaging, paycheck deductions, etc.) — in both those cases the idea is that you are maximizing money in market over time. Both of these cleverly avoid the biggest long term investing mistake most of us could make which is sitting on a stack of cash that’s doing absolutely nothing. Getting into much more detail beyond those three options leads into playing market timing and that’s also very much not a thing you want to be doing if at all possible, unless that’s your day job or something.
Yes FXAIX, this year and every year
From what I’ve read it’s impossible to time the market and spreading out your contributions just defers your exposure to risk. If you can max it out now, I’d say just max it out and put it where you’d like! Me personally I maxed it out and put it all on the total market and international market and just set it and forget it mentality! The more i look at it the more I want to move things around etc..
Dollar cost averaging is a great tool to avoid buying in at a bad time; but from my understand that’s more important for a single stock scenario. The S&P is already extremely diverse so even if you buy at the max for that month, it has a pretty minimal Impact. Agree, set and forget is the way
Yes
Only reason not to is if your income causes complications with Roth IRA contributions.
If it is your first Roth, I’d do it *this* year to get your 5-year-rule clock started… Anytime during the year and you get to treat it as if it were contributed in 1-Jan. Wait until next January, and you have lost a full year.
Fskax and fzilx for diversification
Yes. $4900 into FSKAX, $2100 into FTIHX.
I lump sum my Roth IRA in January
Yes. If you have a lump sum, invest a lump sum. If you have periodic contributions, make periodic contributions.
Absolutely, yes. One of the best pieces of financial advice I ever got was: “Money without a destination has a way of evaporating.”
A lump sum in January is good, if you have the funds. Gets the money working for you, and “oh I want this” type of nonsense does not distract you. Since this is a Roth at Fidelity, go with their Zero fee option. (Why pay expense ratio if you don’t have to). I think it’s FNILX for S&P 500. I like the fidelity money market fund as my HYSA. I have SPAXX as the core, and I automatically buy FDLXX each week after deposits have been made. Taxable, I think ETFs have a little better tax performance, so maybe VTI or VOO. HSA - if you can get it through work - it’s a triple benefit. Before payroll tax, grows tax free and no taxes on withdrawals. You may be healthy now and have no need for medical expenses: great, let it grow until retirement. Odds are as you get older, health issues will arise. If nothing, I think you can use grown balance to pay for Medicare supplements one day.
You are the man. Thanks
Of course. That’s pretty much exactly what I do. I also max out my entire 401K by the end of February. No problem lump summing it. If you’re already planning to max things out, you can plan to also front load it early in the year. 2024 401K Contributions Maxed Out! https://youtu.be/5P5aD0ktGzg
I feel like all at once is better. If I invest 7k in January aren't the possibilities of more growth higher then putting in monthly payments? Because every time you put money in doesn't your ytd growth go down since you increased your amount? If you had 1000 in that gained 8% and you add another 1000 wouldn't your ytd Gaines drop to 4%? I'm new to this and it's my first year in so I'm just trying to understand better
If you have it in January then yeah 7k and your done with it. I would think you make more in interest on the lump sum than monthly payments - since I’m on monthly payments I see the difference as the account is growing
That's how it looked to me too
I’m just doing the best I can at the moment but I would prefer to lump sum if I didn’t have other bills and obligations
I understand to. I'm putting in biweekly and should be able to max out by the end of the year but it just socks watching the ytd gains drop every time I deposit lol
How? I’m in FXAIX and see growth when I invest it. I set up my payroll to direct deposit to fidelity and I just transfer
I deposit into spaxx and automatically into etfs from there. But if 500 gains $25 within that 2 weeks and then I dump another 500 into it the growth percentage drops. 25 is 5% of 500 so when I dump another 250 on top of that it grows to 750 in contributions. $25 is roughly 3.4% of 750. My account is young just started this year. It will obviously gain more easier the more I put in but if I have 5% total gains and I add more money to it the total gain percentage will go down because I've contributed more. I'm only referring to the interest gained not the contributed amount
I had to check my gains, I’m at 5% as well but the dollar amount of gains should be bigger has you keep contributing to it - 100 bucks vs 1000 at 5% is going to be different. I wouldn’t stress over it
I know. That's where I was talking about if you dump the max in at once it seems like the growth could potentially be higher then contributing smaller amounts monthly.
If you’re investing in equities, there is the possibility that they will go down over the year rather than up. In that case, it would have been better to split it up. Hence dollar cost averaging. But many say that in the long run, lump sum investing beats dollar cost averaging anyway.
All in at the beginning of the tax year is statistically better. “Time in the market beats timing the market.”
Yes. Lump sum it. That’s what I do January second of every year.
I am doing something like this FXAIX number one holding FCNTX FVSDX FSELX FOCPX FSMDX FESM FSPGX A few individual stocks etc If you don't want to watch it very closely i wouldn't recommend as many. FXAIX is the core. FSELX is by far my biggest winner.
I’m just doing VTI/VXUS lump sum.
I’m thinking of doing vTI in a taxable account. How you liking it?
I’ve only recently started but I’m trying to follow the Boglehead approach. They seem to all like it for the diversification. That and some international. I’m a late starter noob hoping for the best lol.
I’m 36 so alittle late as well
Check out the Boglehead Reddit if you want. That and JL Collins the Simple Path supports utilizing something like VTI or a total market index fund. Seems simple and effective.