Will you contribute all $6,000 to IRA in Jan or DCA?

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BergeronsBuddies
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Will you contribute all $6,000 to IRA in Jan or DCA?

Post by BergeronsBuddies » Thu Dec 20, 2018 6:03 am

I know this is a bit of a market timing question, but here goes...

If you have the means in January, will you contribute all $6k into your IRA or will you dollar cost average over the year?

With the recent downturn, part of me believes we should put as much away as possible at these lower valuations, the other part of me thinks I should DCA over the year in case of further downturn in the market.

Maybe do my IRA in Jan and DCA my wife’s?

What will you be doing, and does that change from what you’ve done in the past after what could be the worst December in the markets of our lives?

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SagaciousTraveler
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by SagaciousTraveler » Thu Dec 20, 2018 6:12 am

Good morning,

Right now we will contributing $1000 a month for both our Roths. For me, the market can keep going down and I don't want to try and time in.

However, if you can stomach the market going down further, after you put in the $6000, then by all means put your money to work.

Good luck.

Grt2bOutdoors
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Grt2bOutdoors » Thu Dec 20, 2018 6:13 am

This is hardly the worst December, but give it a few more days - 7 more trading days to be exact! What is your time horizon? That, and actually having the cash in hand available to invest is what matter? All else is noise. What are your alternatives? - cash? Okay, you can get maybe 3 percent for a ten year cd. If that works for and it very well may depending on your assets and needs, then use that vehicle. If it doesn’t-we go back to the original question - what are your needs, time horizon and do you have the cash available?

My plan? If I have the cash? I will invest in January, probably the first trading day of the month.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Topic Author
BergeronsBuddies
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by BergeronsBuddies » Thu Dec 20, 2018 6:24 am

Grt2bOutdoors wrote:
Thu Dec 20, 2018 6:13 am
This is hardly the worst December, but give it a few more days - 7 more trading days to be exact! What is your time horizon? That, and actually having the cash in hand available to invest is what matter? All else is noise. What are your alternatives? - cash? Okay, you can get maybe 3 percent for a ten year cd. If that works for and it very well may depending on your assets and needs, then use that vehicle. If it doesn’t-we go back to the original question - what are your needs, time horizon and do you have the cash available?

My plan? If I have the cash? I will invest in January, probably the first trading day of the month.
I did see some data showing it was the worst December since the Great Depression, as crazy as that sounds. Maybe that was incorrect though.

Horizon is quite long. I’m 29, and not going to retire in my 30s or 40s.

It’s going into low rate student loans (1.9%) if we decide to DCA.

Daryl
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Daryl » Thu Dec 20, 2018 6:26 am

I make my annual IRA contribution on the first trading day of the year.

At this point in my investing career, I doubt the difference between a lump sum of $6K and DCA the same amount will have a material impact on my retirement.

3funder
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by 3funder » Thu Dec 20, 2018 6:28 am

Last year, we lump summed. This year, we will DCA; however, it has nothing to do with market timing. Probably not a helpful response, but that's what we're doing.

Triple digit golfer
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Triple digit golfer » Thu Dec 20, 2018 6:37 am

Would you rather maximize potential return or minimize potential regret?

If the former, lump sum. If the latter, DCA.

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Psyayeayeduck
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Psyayeayeduck » Thu Dec 20, 2018 6:53 am

I always do a combination of DCA and lump sum. I have a set amount every two weeks going to my Roth IRA and once in a while I'll throw in a lump sum into the mix until I hit my $6k. Gives me some comfort in doing this way. Might not get the A+ in investing but gives me a passing grade.

Grt2bOutdoors
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Grt2bOutdoors » Thu Dec 20, 2018 7:15 am

BergeronsBuddies wrote:
Thu Dec 20, 2018 6:24 am
Grt2bOutdoors wrote:
Thu Dec 20, 2018 6:13 am
This is hardly the worst December, but give it a few more days - 7 more trading days to be exact! What is your time horizon? That, and actually having the cash in hand available to invest is what matter? All else is noise. What are your alternatives? - cash? Okay, you can get maybe 3 percent for a ten year cd. If that works for and it very well may depending on your assets and needs, then use that vehicle. If it doesn’t-we go back to the original question - what are your needs, time horizon and do you have the cash available?

My plan? If I have the cash? I will invest in January, probably the first trading day of the month.
I did see some data showing it was the worst December since the Great Depression, as crazy as that sounds. Maybe that was incorrect though.

Horizon is quite long. I’m 29, and not going to retire in my 30s or 40s.

It’s going into low rate student loans (1.9%) if we decide to DCA.
Ten years ago, I watched first hand the value of ten years worth of savings go up in smoke in 6 months. It all came back and then some (okay a lot more). The point is you are 29, you have a 50 year plus time horizon. These market events are just a blip in the road. Invest. Your loans are costing you 1.9%, current yield in market is 1.9%, ten years later, earnings are up 3% annually, yield is 3%, that is 6%. Your money doubled every 12 years at 6%. Age 41, doubled. Age 53 - $1 today is quadrupled. Age 65 - 8 times your money and your student loans are paid off! But let’s say growth is half that amount, you still have 4 times your investment. If you don’t need the money invest. If you need the money as a backup efund-put it in your Roth IRA and in a very conservative investment.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

traveler901
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by traveler901 » Thu Dec 20, 2018 7:21 am

Will do a lump sum backdoor Roth contribution in January

tea_pirate
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by tea_pirate » Thu Dec 20, 2018 7:35 am

DCA, mainly because I don't have $6k to toss in all at once without dipping into the emergency fund. I transfer any excess above the emergency fund threshold away to investments every couple of months.

Strayshot
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Strayshot » Thu Dec 20, 2018 7:40 am

My $12K will go in all at once and get backdoored the next day.......

annielouise
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by annielouise » Thu Dec 20, 2018 7:47 am

Until a few years ago, we did the lunp sun in January. Then our cash flow changed and we now DCA.

It would be cool for a young couple to test this. Invest both accounts identically. Lump sum one and DCA the other. Let us know the results in 5, 10, 20, and 30 years. :wink:

Blake7
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Blake7 » Thu Dec 20, 2018 7:48 am

I transfer the entire amount into the IRA's sweep account early January and then DCA it into the equity fund over a few months. As a few have mentioned here, it's really not relevant in the big picture given the amount going in and the typical time horizon.

Jags4186
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Jags4186 » Thu Dec 20, 2018 7:50 am

No bonuses this year or last year means we’ll be doing $1000/mo. When bonuses were coming in December/January we’d lump sum.

Nissanzx1
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Nissanzx1 » Thu Dec 20, 2018 7:51 am

We will DCA and it will take all year to come up with the $12,000 from our income.

pdavi21
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by pdavi21 » Thu Dec 20, 2018 7:52 am

If you are going to DCA, but can afford to lump sum, put in the whole amount in at least a money market or shortterm bond fund, to get tax free interest while you DCA.

EDIT: If I have 12k excess aftertax holdings-immediate contribution/DCA investment. If not, DCA or Hybrid contribution and investment.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

Mike Scott
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Mike Scott » Thu Dec 20, 2018 8:04 am

Usually, a bit goes in every month but for now I'm holding enough $ to complete our 2018 IRA contributions until after I do a final tweak on 2018 tax prep and all the final forms are even avaialble. I think I have the new tax plan figured out in my spreadsheet but I want to wait and see where a couple of items land in the final form. I will then have a better handle on what to plan for 2019.

terran
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by terran » Thu Dec 20, 2018 8:15 am

I'll be selling from taxable and putting it in our IRAs in a lump sum. If you have enough cash to lump sum into your IRAs January (unless have a spare $12k in your December paycheck) then you've been sitting on cash instead of investing as soon as you have it as research has suggested you should. I could understand not doing my method if there would be be tax implications for me to sell in taxable, in which case I would lump sum as much as I could into IRAs as the money becomes available throughout the year.
Last edited by terran on Thu Dec 20, 2018 8:18 am, edited 1 time in total.

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RickBoglehead
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by RickBoglehead » Thu Dec 20, 2018 8:17 am

This combines two things. First, can you afford to contribute all $6,000 at once? If no, then you're not really DCAing, are you. Second, if you can afford it, do you DCA or lump sum? Often quoted that lump sum comes out ahead.
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Elena
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Elena » Thu Dec 20, 2018 8:22 am

As soon as the Ally promotion is over, Jan. 15, I will free the funds and lump sum. I normally would do it Jan. 2, but this year I did the bonus rate promotion.

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Tamarind
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Tamarind » Thu Dec 20, 2018 8:24 am

DCA, but not for the reason OP suggests. Rather I DCA because I'm fully invested other than emergency fund, so each month's contribution comes from cash flow.

Soon2BXProgrammer
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Soon2BXProgrammer » Thu Dec 20, 2018 8:38 am

i have the cash available.. i also in theory i probably need to rebalance and i have an asset location strategy. (each account holds one position).

Therefore, shortly after the beginning on the year. i'll make both my, and my wifes contributions to our IRAs, and rebalance at the same time, if needed.
'
about the cash available.. in theory that means i'm not fully invested. i realize that.. my cash flow is throwing off more cash then i currently have automated to save, therefore, i need to decide what is next.

Part of that is a by product of passing the social security cap, and then participating in a NQDC plan (pretax, therefore less tax being withheld), etc. my paycheck throughout the year is irregular, so right now it is bigger then normal. after jan 1, it should shrink quite a bit, back to normal levels.

nolesrule
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by nolesrule » Thu Dec 20, 2018 9:22 am

We will do lump sum backdoor Roths as soon as we have the earned income to support the contributions. We already have the money on hand.

That will be Jan 31st for me and Jan 18th for my wife.

kilpatty
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by kilpatty » Thu Dec 20, 2018 9:37 am

Stay the course

Maxing out my IRA on Jan 2nd :D

TylerS7
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by TylerS7 » Thu Dec 20, 2018 9:49 am

I will be putting $3500 into my HSA as soon as I am able. My Simple IRA and my automatic transactions in my taxable account will be monthly.

Frank Grimes
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Frank Grimes » Thu Dec 20, 2018 9:49 am

Once bonuses come in we'll both backdoor and invest it all at once.

letsgobobby
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by letsgobobby » Thu Dec 20, 2018 10:08 am

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Last edited by letsgobobby on Mon Apr 22, 2019 2:25 pm, edited 1 time in total.

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birdog
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by birdog » Thu Dec 20, 2018 10:15 am

All $6K in January. Because of the long term upward trajectory of the market the odds of growing your investment to a higher amount is greater with a lump sum investment. DCA is more statistically likely to produce lower overall returns. I play the odds.

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SquawkIdent
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by SquawkIdent » Thu Dec 20, 2018 10:19 am

Lump 1-2 (takes 10 seconds), backdoor 1-3 (another 10 seconds). Done :sharebeer

crg11
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by crg11 » Thu Dec 20, 2018 10:24 am

I'm seriously considering doing a lump sum for my IRA and my SO's on January 1st or shortly after (expecting a bonus mid January, so may just wait for that). It'll be the first time we've ever had enough savings to do this vs. DCA.

Then I'll throw the equivalent month DCA payment into savings in prep for 2020, hoping we can do the same again.

Independent George
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Independent George » Thu Dec 20, 2018 10:25 am

I will be doing a lump sum. It kind of sucked when I did in January 2018, but who knows what 2019 will bring? The bigger question for me is whether or not I rebalance.

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Smorgasbord
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Re: Will you contribute all $6,000 to IRA in Jan or DCA?

Post by Smorgasbord » Thu Dec 20, 2018 10:26 am

I do both. Over the past decade or so, I've dollar cost averaged into my IRA by putting in contributions every January.

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