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Message
Should I Contribute to an Index Fund on the Same Day Each Month or Wait til Low?
Posted on 6/8/15 at 11:26 am
Posted on 6/8/15 at 11:26 am
I typically throw in my monthly VFINX contribution on the 1st of the month right after I get paid. This month it was around 196 when I paid in.
Now it's 193.
If I had waited until today to pay, would I get more return on my investment, or is it negligible at this point?
Now it's 193.
If I had waited until today to pay, would I get more return on my investment, or is it negligible at this point?
5
Posted on 6/8/15 at 11:29 am to StringedInstruments
how do you know what is low and what is high? Easy to see after the fact, but the fund could have moved to 200 today rather than 193.
Posted on 6/8/15 at 11:31 am to StringedInstruments
How do you know its not going to go down tomorrow? and the next day? and the next day?
If you're just sinking money into an index fund, don't overthink it. You're still averaging in over time. Some months you'll be a tad high and some months you'll be a tad low. You really shouldn't worry about monthly contributions that much. I suspect you have a ton of time left in the market and your monthly contributions probably aren't that big in the first place.
If you're just sinking money into an index fund, don't overthink it. You're still averaging in over time. Some months you'll be a tad high and some months you'll be a tad low. You really shouldn't worry about monthly contributions that much. I suspect you have a ton of time left in the market and your monthly contributions probably aren't that big in the first place.
Posted on 6/8/15 at 2:00 pm to StringedInstruments
Neither.
If you know when the lows are, quit your job and start your own hedge fund. It will be way more profitable.
Otherwise, DCA every month.
If you know when the lows are, quit your job and start your own hedge fund. It will be way more profitable.
Otherwise, DCA every month.
Posted on 6/8/15 at 2:58 pm to StringedInstruments
I would say the same day each month.
But if you know when it's low. . . let me know!
But if you know when it's low. . . let me know!
Posted on 6/8/15 at 4:36 pm to Patrick_Bateman
is it better to buy the fund once a month or quarterly with 3x the amount?
ie 1000 a month or 3k 4x a year
ie 1000 a month or 3k 4x a year
Posted on 6/8/15 at 9:47 pm to SomeGuyFromLA
If there is no transaction fee once a month would be better. You would net more in dividends and incrementally higher capital gains over the long haul.
Posted on 6/8/15 at 10:46 pm to StringedInstruments
I do $105 and change every Tuesday through my vanguard Roth IRA. I like the idea of every week personally.
Posted on 6/9/15 at 2:12 am to SomeGuyFromLA
quote:
is it better to buy the fund once a month or quarterly with 3x the amount?
If it's a mutual fund then once a month is fine. If it's ETF I'd do it quarterly or longer till you build up enough to buy a large chunk at a time. This assumes there is a commission to buy the ETF.
Posted on 6/9/15 at 7:11 am to gpburdell
quote:
If it's a mutual fund then once a month is fine. If it's ETF I'd do it quarterly or longer till you build up enough to buy a large chunk at a time. This assumes there is a commission to buy the ETF.
What's the benefit of this? Someone mentioned dividends if you pay monthly. Wouldn't that be the smarter route?
Posted on 6/9/15 at 7:28 am to StringedInstruments
Catching dividends does not matter at all. The only advantage of investing more often is keeping less money in cash and, to a lesser extent, creating more entry points.
Posted on 6/9/15 at 1:24 pm to SomeGuyFromLA
You should definitely contribute as frequently as possible if there are not any (or very small) transaction fees. This should be the case if you're buying a Vanguard fund through Vanguard. It's the same principle as paying a mortgage twice a month. You're not leaving money that could be compounding interest on the table.
Posted on 6/10/15 at 12:49 am to StringedInstruments
quote:
What's the benefit of this? Someone mentioned dividends if you pay monthly. Wouldn't that be the smarter route?
If you're using ETFs and there is a commission then buying larger (hence fewer) chunks will offset the commission expense. If your brokerage doesn't charge for ETF trades then you can do more frequently.
For most people in the early years of investing, mutual funds are usually the better option. Though some mutual funds can have high initial minimum investment.
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