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Started By
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Roth Contributions Question
Posted on 3/20/13 at 8:20 am
Posted on 3/20/13 at 8:20 am
With how high the market is right now, would it be better to max out your 2013 Roth contribution right now, or just do $500 a month, in case there is a pull back 
4
Posted on 3/20/13 at 9:02 am to Lsut81
Really doesn't matter unless you have a better place for your money at the moment.
You don't have to invest in anything particular once you deposit into a Roth.
You don't have to invest in anything particular once you deposit into a Roth.
Posted on 3/20/13 at 9:06 am to Lsut81
quote:
in case there is a pull back
What if there isn't a pull back? It drives me fricking nuts to hear people say these things. There are times in an investing life where people can make decisions:
1. Market is all time high: people are scared to invest. Yet over my career, that mark is always eclipsed.
2. Market is too low: this is THE ideal buying opportunity, yet people again are scared as frick
Posted on 3/20/13 at 9:14 am to Broke
quote:
What if there isn't a pull back?
I just didn't know if it was smart to go all in or pepper the investment over time
Posted on 3/20/13 at 10:07 am to Lsut81
just stay the course, why would you lump sum in when it is supposedly high? of course, it could go much higher or much lower, just keep to your plan, steady payments over time seem to even out the highs and lows over time resulting in a lower overall price paid in the long run...
Posted on 3/20/13 at 10:20 am to Lsut81
I can't time any market very well and doubt anyone else can either, so I say go right ahead.
FWIW you don't to invest in US stocks. You can invest in a fund specializing in Malaysian junk bonds if you like. Or you can just contribute to the Roth and let it sit in cash.
But if you have the ability to do so, go ahead and get the money in the Roth, then I highly recommending thinking through a long-term investment strategy that involves more than just the US stock market.
FWIW you don't to invest in US stocks. You can invest in a fund specializing in Malaysian junk bonds if you like. Or you can just contribute to the Roth and let it sit in cash.
But if you have the ability to do so, go ahead and get the money in the Roth, then I highly recommending thinking through a long-term investment strategy that involves more than just the US stock market.
Posted on 3/20/13 at 10:23 am to foshizzle
quote:
But if you have the ability to do so, go ahead and get the money in the Roth, then I highly recommending thinking through a long-term investment strategy that involves more than just the US stock market.
Roth is in a Vanguard 2040 fund
I've got $5500 cash on hand, just deciding whether to put it all in a max out 2013, or to do $500 a month.
Posted on 3/20/13 at 10:32 am to Lsut81
Yes, but what you are not understanding is that it doesn't matter even the slightest whether you put it all in now or spread it out.
Posted on 3/20/13 at 10:45 am to TyOconner
quote:
it doesn't matter even the slightest whether you put it all in now or spread it out.
How doesn't it?
I put in 5k right now and buy 500 shares of X... In 4 months the market retreats 20%, my investment is now worth 4K and equivilant to buying 400 shares.
or
I put in 2k or 200 shares for the next four months and the market does the same thing, I lose $400 of value, but my next contributions have more buying power and over the next four months I am able to buy more shares with my money to level out the losses when the prices increase.
Maybe I'm looking at it wrong. Sure if the market continues to go up, I miss out, but I am somewhat mitigating a large loss.
Again, new to all the investing stuff.
Posted on 3/20/13 at 10:54 am to Lsut81
A great argument can be made about dollar cost averaging. But it is up to you in the end.
Posted on 3/20/13 at 10:56 am to Lsut81
You gonna sell your house to get out from under it if the value declines $10,000 on your next appraisal? Or are you going to keep living in it knowing the reason you bought it?
Posted on 3/20/13 at 11:02 am to Broke
quote:
You gonna sell your house to get out from under it if the value declines $10,000 on your next appraisal? Or are you going to keep living in it knowing the reason you bought it?
I completely understand that thinking... I am 25-30yrs away from retiring (hopefully) and know the markets will always correct themselves, but was just wondering if dollar cost averaging was worth it or not
Posted on 3/20/13 at 11:35 am to Lsut81
def not worth it especially once you consider transaction costs on a monthly basis
Posted on 3/20/13 at 11:38 am to Lsut81
quote:
but was just wondering if dollar cost averaging was worth it or not
Sure it is worth it. But you have lump sum now. You have to take into account the time value of money. If I were in your shoes I would invest and forget about it for 3 years.
**This is not investment advice and should not be construed as investment advice**
Posted on 3/20/13 at 11:39 am to Broke
quote:
Sure it is worth it. But you have lump sum now. You have to take into account the time value of money. If I were in your shoes I would invest and forget about it for 3 years.
quote:
**This is not investment advice and should not be construed as investment advice**
I wouldn't take advice from you anyways...
Just sayin
Posted on 3/20/13 at 12:13 pm to Lsut81
Obviously you are gonna make something if you put it all in now and the market rises and you will lose if it plays out the opposite way. You are pretty much asking people to time the market for you which is impossible. Therefore, if you buy and hold(def what you need to do) then the time at which you initially invest matters almost none.
Posted on 3/20/13 at 6:05 pm to stonerolledaway
quote:
just keep to your plan, steady payments over time seem to even out the highs and lows over time resulting in a lower overall price paid in the long run...
If only there was a name and math associated with this phenomenon...
Dollar Cost Averaging
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