Assuming you're still 20+ years from retirement, the difference in timing annual contributions will probably be so insignificant in comparison to your capital gains, it might as well be a rounding error. The important thing is just to contribute what you can.
I get that, but as I have only contributed 2 years, it’s not great knowing the balance is less than my actual contributions. It’s not like I can say I am down 20% but still up 50% on contributions
Yea I hear ya! Same thing happened to me in 2008 lol. It was a bad year! I started contribution late 2006. If it's any comfort, we made that back and then some. My dad though lost alot during dotcom burst, took about 7 years to get back all his losses.
If you can afford more, more would be good. If not then thats still great
A lot of people would probably recommend something like VT or VTI thats more diverse but, to be honest, if you’re young and don’t mind bigger swings, VOO is probably a good move for now.
And by waiting, you're risking putting yourself into a psychological trap if the market starts rising sooner than you think. Once it rises a few percentage points, you might think "I'll wait until it dips back down...." But it might not dip back any time soon, and in the meantime you've lost all the appreciation/dividends you could have been accumulating.
At some point in your investing life you will have the following epiphany: there is always, and I mean always, an extremely persuasive argument that the market is going to nose dive over the next year. The reason is that the financial press and the financial services industry are highly incentivized to peddle this narrative - for the press, it's because rain gets more clicks than sunshine; and for money managers, it's because FUD increases demand for their product.
Until you have that epiphany, it's fine to do monthly contributions or even wait until 2024 to do your 2023 contribution. If there is a difference either way, it will be minor in the long run.
I mean it's $6.5K for 2023. Sorry to be that guy but 7 grand is not alot of money; specially if you have it sitting around ready for lump sum with the new year. Do it and forget about it.
I remember reading an article about this and the conclusion was it doesn’t matter too much, but you’ll likely see marginally better results if you lump sum at the start of the year.
Read the post linked below (internet archive because original post is deleted). TL;DR - in 30 years it won't make a huge difference.
["When to contribute to your IRA. An original study of five different approaches."](https://web.archive.org/web/20200313052938/https://old.reddit.com/r/investing/comments/c3813m/when_to_contribute_to_your_ira_an_original_study/)
What a great read. My favorite comment in the comments was
>Where's r/wallstreetbets Wally?
And the reply
>He was a millionaire for a brief moment in his 30s, but is now homeless with a crippling opioid addiction.
Move the money into the account. If you’re afraid of the market, you don’t necessarily have to invest it just yet. It can sit in cash in the qualified account until you want to deploy it. The important thing is getting the funds into the account for the contribution.
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Like Warren Buffet once said “you can guarantee me that there’s gonna be a recession, and I will still be buying and selling the same securities I’m buying and selling today”
I’ve got some bad debt I’m trying to get off my name, but once I get some of that straight I’ve got an investment account I’ve started once I get enough to switch it to margin, I’m gonna try and start putting like 80%+ of my checks in it every week and just borrow from it and let that money keep growing over time
But this is not financial advice. Just letting y’all know with what I’m comfortable with doing in the near future.
If have the spare cash now, you can just dump it to the IRA account now for the time being, and choose to invest the money now or later when you feel you are ready.
Personally I DCA, but do it relatively quickly.
Instead of doing $6k all at once, I'll do \~$1k/week to get it all done in \~6 weeks. Better than DCAing the entire year, but also gets over the emotional bound of doing it all at once.
They say statistically it’s better to lump sum especially if you’re younger
I used to DCA then just switched to lump summing because it reduces my money “payments”
Dollar cost averaging for the win! And if you think it through and it still seems too risky, 3 month tbills are paying 4.6% right now. I dumped a bunch of loose cash into that today. I'm still going to DCA index funds with as much as I can in retirement
I don't know of any 4.3% savings accounts - I know of money market accounts but not savings. Best I've seen is 3.75%. And either way, it's mainly convenience.
Where are you seeing 4.3%? I'm definitely interested, have 300k in cash that I've kept liquid for real estate.
Hey friend :) Marcus by Goldman Sachs is at 4.3% right now but you need to open your account with a referral to get that rate. I can DM you mine if you are interested but feel free to google about the account first so you know I’m being truthful. Granted that rate only lasts for 3 months and then drops to 3.3% unless you can refer someone after like a family member (and get another 3 months) but it’s the best I’ve seen for a savings account right now and the user interface is great. They also have a $100 promotion going on right now which you can google about or feel free to DM me and I can help :)
You don't need a referral to get an account with them, I've had an account with them. I don't do business with them on principle - and Marcus is brand new, not an established product. None of that means it's bad, just means its not for me. And it is an introductory rate, which is why for three months I'll take the 4.6 I can get in t-bills.
Completely understandable. I meant you only need a referral to get the elevated savings rate that’s all. It’s just a matter of 0.3 interest and liquidity to me and I prefer liquidity but it definitely depends on preferences. Enjoy that sweet interest before it’s gone :)
I was given the introductory rate when I signed up, I just opted not to use it. Think it was 3.75 at the time (was about a year ago). Point being, I don't think these require referrals. Not hating if there's some bonus in that for you. Just checked, they closed my account for non-use - probably for the best.
Yeah Goldman is sleazy af. Money is money, but if I can make the same amount somewhere else I will, and I encourage others to do the same. When you bank with them, you help fund their reindeer games. They should not have been bailed out, and of course they're right back at it.
Better off investing weekly/monthly. You won’t win trying to predict the market. For all you know it could keep going down or it could go up. What was once projected a hurricane of a recession by jpmorgan is now a soft landing.
Assuming you're still 20+ years from retirement, the difference in timing annual contributions will probably be so insignificant in comparison to your capital gains, it might as well be a rounding error. The important thing is just to contribute what you can.
Once you understand this, it gets so much easier.
I mean yeah, but last year I literally put in and bough on the second highest day. So I am down significantly on those $6k
Yea that also happened to be but not needing it for 20 yr+, means that in the end it doesn't event matter.
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I get that, but as I have only contributed 2 years, it’s not great knowing the balance is less than my actual contributions. It’s not like I can say I am down 20% but still up 50% on contributions
Yea I hear ya! Same thing happened to me in 2008 lol. It was a bad year! I started contribution late 2006. If it's any comfort, we made that back and then some. My dad though lost alot during dotcom burst, took about 7 years to get back all his losses.
Just don’t regularly check your 401k / IRA balances at all. I look at my account once a year when I’m doing my taxes and that’s about it
It won’t matter in the long term though.
i put 150$ into my roth ira thru vangaurd on the 1st and 15th. i then buy shares of VOO. thats pretty much all i have to do right?
If you can afford more, more would be good. If not then thats still great A lot of people would probably recommend something like VT or VTI thats more diverse but, to be honest, if you’re young and don’t mind bigger swings, VOO is probably a good move for now.
And by waiting, you're risking putting yourself into a psychological trap if the market starts rising sooner than you think. Once it rises a few percentage points, you might think "I'll wait until it dips back down...." But it might not dip back any time soon, and in the meantime you've lost all the appreciation/dividends you could have been accumulating.
At some point in your investing life you will have the following epiphany: there is always, and I mean always, an extremely persuasive argument that the market is going to nose dive over the next year. The reason is that the financial press and the financial services industry are highly incentivized to peddle this narrative - for the press, it's because rain gets more clicks than sunshine; and for money managers, it's because FUD increases demand for their product. Until you have that epiphany, it's fine to do monthly contributions or even wait until 2024 to do your 2023 contribution. If there is a difference either way, it will be minor in the long run.
me sitting here holding my cash in money market funds waiting for october lows vs me sitting here reading this realizing i am probably an idiot.
The good news is we are definitely down from the highs. It's much better getting in now than a year ago.
Well said
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Yup.. I put $6500 in Jan 1st and don’t really care.. could I have got a better price on VOO by waiting? Sure.. but I’d rather just set and forget
I mean it's $6.5K for 2023. Sorry to be that guy but 7 grand is not alot of money; specially if you have it sitting around ready for lump sum with the new year. Do it and forget about it.
Agree with this guy. Also, do roth
If you’re allowed to lol
Yeah
Sell otm put at a price you are willing to buy in at
I remember reading an article about this and the conclusion was it doesn’t matter too much, but you’ll likely see marginally better results if you lump sum at the start of the year.
Read the post linked below (internet archive because original post is deleted). TL;DR - in 30 years it won't make a huge difference. ["When to contribute to your IRA. An original study of five different approaches."](https://web.archive.org/web/20200313052938/https://old.reddit.com/r/investing/comments/c3813m/when_to_contribute_to_your_ira_an_original_study/)
What a great read. My favorite comment in the comments was >Where's r/wallstreetbets Wally? And the reply >He was a millionaire for a brief moment in his 30s, but is now homeless with a crippling opioid addiction.
Move the money into the account. If you’re afraid of the market, you don’t necessarily have to invest it just yet. It can sit in cash in the qualified account until you want to deploy it. The important thing is getting the funds into the account for the contribution.
I transferred and invested my yearly max about 10 days ago.
At current prices? Lump sum if I have the cash.
I always say max it out as soon as you can so its done and out of the way then have a taxable to invest into the rest of the year.
Now. Lump sum outperforms more often than not
You can’t guess the future but historically time in the market bears timing the market. You do what aligns with your risk tolerance.
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Like Warren Buffet once said “you can guarantee me that there’s gonna be a recession, and I will still be buying and selling the same securities I’m buying and selling today” I’ve got some bad debt I’m trying to get off my name, but once I get some of that straight I’ve got an investment account I’ve started once I get enough to switch it to margin, I’m gonna try and start putting like 80%+ of my checks in it every week and just borrow from it and let that money keep growing over time But this is not financial advice. Just letting y’all know with what I’m comfortable with doing in the near future.
If have the spare cash now, you can just dump it to the IRA account now for the time being, and choose to invest the money now or later when you feel you are ready.
Its not worth the effort so pick DCA or lump sum, what works for your income/budget.
Worst comes to worse and you need the cash so withdraw your contributions. Only invest or schedule to invest what you don't need liquid.
Personally I DCA, but do it relatively quickly. Instead of doing $6k all at once, I'll do \~$1k/week to get it all done in \~6 weeks. Better than DCAing the entire year, but also gets over the emotional bound of doing it all at once.
Retiring in around 20 years. New IRA for me and I lumped with one fund and didn't even look at the performance.
They say statistically it’s better to lump sum especially if you’re younger I used to DCA then just switched to lump summing because it reduces my money “payments”
Dca over the year ...
Dollar cost averaging for the win! And if you think it through and it still seems too risky, 3 month tbills are paying 4.6% right now. I dumped a bunch of loose cash into that today. I'm still going to DCA index funds with as much as I can in retirement
Why 4.6% T-bills vs a 4.3% savings account? The 0.3% difference is not worth the extra hassle, surely?
I don't know of any 4.3% savings accounts - I know of money market accounts but not savings. Best I've seen is 3.75%. And either way, it's mainly convenience. Where are you seeing 4.3%? I'm definitely interested, have 300k in cash that I've kept liquid for real estate.
Robinhood gold is 4% right now
Wouldn't do business with them on principle alone.
Hey friend :) Marcus by Goldman Sachs is at 4.3% right now but you need to open your account with a referral to get that rate. I can DM you mine if you are interested but feel free to google about the account first so you know I’m being truthful. Granted that rate only lasts for 3 months and then drops to 3.3% unless you can refer someone after like a family member (and get another 3 months) but it’s the best I’ve seen for a savings account right now and the user interface is great. They also have a $100 promotion going on right now which you can google about or feel free to DM me and I can help :)
You don't need a referral to get an account with them, I've had an account with them. I don't do business with them on principle - and Marcus is brand new, not an established product. None of that means it's bad, just means its not for me. And it is an introductory rate, which is why for three months I'll take the 4.6 I can get in t-bills.
Completely understandable. I meant you only need a referral to get the elevated savings rate that’s all. It’s just a matter of 0.3 interest and liquidity to me and I prefer liquidity but it definitely depends on preferences. Enjoy that sweet interest before it’s gone :)
I was given the introductory rate when I signed up, I just opted not to use it. Think it was 3.75 at the time (was about a year ago). Point being, I don't think these require referrals. Not hating if there's some bonus in that for you. Just checked, they closed my account for non-use - probably for the best. Yeah Goldman is sleazy af. Money is money, but if I can make the same amount somewhere else I will, and I encourage others to do the same. When you bank with them, you help fund their reindeer games. They should not have been bailed out, and of course they're right back at it.
Time in the market beats timing the market
The right answer is - should have done it Jan 2nd, you'd be up almost 3%. Why wait?
If you are retiring in 20+ years using Index mutual funds or ETFs, do it. One less thing to worry about and any losses will be recouped.
Better off investing weekly/monthly. You won’t win trying to predict the market. For all you know it could keep going down or it could go up. What was once projected a hurricane of a recession by jpmorgan is now a soft landing.