Should I put another $5500 in the Market on January first for my ROTH IRA?

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randydimera
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Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by randydimera » Sat Dec 22, 2018 8:23 pm

Hey all, this year I put my 5500 dollars in for the first time ever in a target date retirement fund. I am wondering if since the market is down pretty bad these days, if I should put my max contribution in the first of the year to get it done with. I am 24 years old and I do have enough money lieing around to do this. Wondering what you guys think. Maybe half now and half midway in the year? Or is it always better for long term gains to put it in sooner rather than later?

Thanks much

bg5
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by bg5 » Sat Dec 22, 2018 8:24 pm

Great time to buy in my opinion but as others will note nobody has a freaking clue. Put it in all at once and just know that your getting a pretty good deal based on current market conditions.

getcloned
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by getcloned » Sat Dec 22, 2018 8:27 pm

I always place the order to fully fund our IRAs on January 1. The market may go down further... or it may not. FYI - 2019 limit has been increased to $6000. :sharebeer

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randydimera
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by randydimera » Sat Dec 22, 2018 8:31 pm

getcloned wrote:
Sat Dec 22, 2018 8:27 pm
I always place the order to fully fund our IRAs on January 1. The market may go down further... or it may not. FYI - 2019 limit has been increased to $6000. :sharebeer
Its always better to put it in and lose money than hold off and not correct? And yeah 6k, that is awesome!!

livesoft
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by livesoft » Sat Dec 22, 2018 8:35 pm

Probably not since the marker is closed January 1st.
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MinimalJ
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by MinimalJ » Sat Dec 22, 2018 8:36 pm

I usually do this as well. But now I'm thinking a good strategy would be stagger it throughout the year in case it keeps going down. So 5500/12 per month or 5500/6 every two months. Thoughts?

Mickey7
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by Mickey7 » Sat Dec 22, 2018 8:50 pm

MinimalJ wrote:
Sat Dec 22, 2018 8:36 pm
I usually do this as well. But now I'm thinking a good strategy would be stagger it throughout the year in case it keeps going down. So 5500/12 per month or 5500/6 every two months. Thoughts?
I normally stagger mine due to necessity, this year I can call it a strategy.
:D

Nicolas
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by Nicolas » Sat Dec 22, 2018 8:51 pm

MinimalJ wrote:
Sat Dec 22, 2018 8:36 pm
I usually do this as well. But now I'm thinking a good strategy would be stagger it throughout the year in case it keeps going down. So 5500/12 per month or 5500/6 every two months. Thoughts?
I bet if the market at some point appears to be taking off you’ll cave and drop all the rest in at once instead of completing the DCA. I know I would. Since you can’t predict where it’s going I say put it all in at once on the first market day. Anyway $6K isn’t much money so it doesn’t matter all that much either.
Last edited by Nicolas on Sat Dec 22, 2018 8:53 pm, edited 1 time in total.

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randydimera
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by randydimera » Sat Dec 22, 2018 8:53 pm

Nicolas wrote:
Sat Dec 22, 2018 8:51 pm
MinimalJ wrote:
Sat Dec 22, 2018 8:36 pm
I usually do this as well. But now I'm thinking a good strategy would be stagger it throughout the year in case it keeps going down. So 5500/12 per month or 5500/6 every two months. Thoughts?
I bet if the market at some point appears to be taking off you’ll cave and drop all the rest in at once instead of completing the DCA. I know I would. Since you can’t predict where it’s going I say put it all in at once on the first market day.
Sorry but what does DCA mean?

Nicolas
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by Nicolas » Sat Dec 22, 2018 8:54 pm

randydimera wrote:
Sat Dec 22, 2018 8:53 pm
Nicolas wrote:
Sat Dec 22, 2018 8:51 pm
MinimalJ wrote:
Sat Dec 22, 2018 8:36 pm
I usually do this as well. But now I'm thinking a good strategy would be stagger it throughout the year in case it keeps going down. So 5500/12 per month or 5500/6 every two months. Thoughts?
I bet if the market at some point appears to be taking off you’ll cave and drop all the rest in at once instead of completing the DCA. I know I would. Since you can’t predict where it’s going I say put it all in at once on the first market day.
Sorry but what does DCA mean?
Dollar Cost Average, where you invest periodically instead of at once.

justsomeguy2018
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by justsomeguy2018 » Sat Dec 22, 2018 9:17 pm

randydimera wrote:
Sat Dec 22, 2018 8:23 pm
Hey all, this year I put my 5500 dollars in for the first time ever in a target date retirement fund. I am wondering if since the market is down pretty bad these days, if I should put my max contribution in the first of the year to get it done with. I am 24 years old and I do have enough money lieing around to do this. Wondering what you guys think. Maybe half now and half midway in the year? Or is it always better for long term gains to put it in sooner rather than later?

Thanks much
Put 70% in to start with then watch the market for further drops. Or put it all in and keep 30% in MM fund, ready to move when needed.

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welderwannabe
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by welderwannabe » Sat Dec 22, 2018 9:39 pm

randydimera wrote:
Sat Dec 22, 2018 8:23 pm
Hey all, this year I put my 5500 dollars in for the first time ever in a target date retirement fund. I am wondering if since the market is down pretty bad these days, if I should put my max contribution in the first of the year to get it done with. I am 24 years old and I do have enough money lieing around to do this. Wondering what you guys think. Maybe half now and half midway in the year? Or is it always better for long term gains to put it in sooner rather than later?

Thanks much
Put the full $6K in as soon as you can in the new year. Its small money in the scheme of things.

If you are nervous, put half in the target and leave half in the settlement fund or money market, but I see no reason not to dump it into the roth so at least you arent paying taxes on it.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

TropikThunder
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by TropikThunder » Sat Dec 22, 2018 10:07 pm

randydimera wrote:
Sat Dec 22, 2018 8:23 pm
Hey all, this year I put my 5500 dollars in for the first time ever in a target date retirement fund. I am wondering if since the market is down pretty bad these days, if I should put my max contribution in the first of the year to get it done with. I am 24 years old and I do have enough money lieing around to do this. Wondering what you guys think. Maybe half now and half midway in the year? Or is it always better for long term gains to put it in sooner rather than later?

Thanks much
Is the IRA your only retirement account? For me, I have a 403b from work, Roth IRA, and HSA. I like to hedge taxes, so my 403b is Traditional while my IRA is Roth (the HSA is hybrid). I also like to hedge timing, so my IRA and HSA are lump-sum (all in as early as possible) while my 403b is over time (DCA) by necessity since it's via payroll deduction. If the market keeps falling in 2019, my 403b will be catching lower prices during the year. If the market rises in 2019, at least my IRA & HSA went in at the low end.

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randydimera
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by randydimera » Sat Dec 22, 2018 10:12 pm

TropikThunder wrote:
Sat Dec 22, 2018 10:07 pm
randydimera wrote:
Sat Dec 22, 2018 8:23 pm
Hey all, this year I put my 5500 dollars in for the first time ever in a target date retirement fund. I am wondering if since the market is down pretty bad these days, if I should put my max contribution in the first of the year to get it done with. I am 24 years old and I do have enough money lieing around to do this. Wondering what you guys think. Maybe half now and half midway in the year? Or is it always better for long term gains to put it in sooner rather than later?

Thanks much
Is the IRA your only retirement account? For me, I have a 403b from work, Roth IRA, and HSA. I like to hedge taxes, so my 403b is Traditional while my IRA is Roth (the HSA is hybrid). I also like to hedge timing, so my IRA and HSA are lump-sum (all in as early as possible) while my 403b is over time (DCA) by necessity since it's via payroll deduction. If the market keeps falling in 2019, my 403b will be catching lower prices during the year. If the market rises in 2019, at least my IRA & HSA went in at the low end.
The roth is my only retirement fund so far. I am in grad school so I am almost ready to get out into the job market. Ill finish at the end of next year with a masters degree at 25. So once I get my career ill start a 401k and things like that

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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by MJW » Sat Dec 22, 2018 10:20 pm

randydimera wrote:
Sat Dec 22, 2018 8:23 pm
Hey all, this year I put my 5500 dollars in for the first time ever in a target date retirement fund. I am wondering if since the market is down pretty bad these days, if I should put my max contribution in the first of the year to get it done with. I am 24 years old and I do have enough money lieing around to do this. Wondering what you guys think. Maybe half now and half midway in the year? Or is it always better for long term gains to put it in sooner rather than later?

Thanks much
What would keep you from putting it in at once, and what, specifically, are you concerned about?

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arcticpineapplecorp.
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by arcticpineapplecorp. » Sat Dec 22, 2018 10:46 pm

we'll start with a couple of assumptions (these both could be wrong because you didn't specify in your OP. So garbage in garbage out). That being said, let's assume:
1. you're in the target date 2065 fund since you're so young and
2. you invested all $5,500 for 2018 on January 2, 2018.

This target date fund (2065) is down 10.65% year to date (source: https://quotes.morningstar.com/chart/fu ... A%5B%5D%7D)

If #1 and #2 are true, you're $5,500 investment on Jan 2, 2018 has fallen by 10.65% ($585.75) and is now only worth $4,914.25.

if you put another $5,500 in all at once on January 2, 2019 and the market drops afterward, your portfolio will be worth less. How much less? Depends on how much more the market has yet to fall. Why don't we say it falls a dramatic amount (like 2008-2009 amounts)...that would be a 50% decline. What would you have if your $5,500 that's now worth $4.914.25 PLUS your new investment of $5,500 (on Jan 2, 2019) falls another 50%?

$4,914.25 + $5,500 = $10,414.25 (Jan 2, 2019) then...

If $10,414.25 falls 50% you'd have $5,207.13.

Will watching your original investment(s) of $11,000 ($5500 for 2018 and $5500 for 2019) drop to $5,207.13 change your life? I'd venture to say, probably not. After all could you retire on $11,000 anyway (your two Roth investments for 2018 and 2019)? If not, you couldn't retire on $5,207.13 either. Either way, you've got a long way to go and more to accumulate. Investing is a marathon, not a sprint. So you've got to keep socking it away for decades. Don't focus on one year at a time. It's relatively meaningless in the grand scheme of things.

You'll also lose far more than this at times the longer you invest. Talk to some people here who have seen their portfolios rise and fall by tens of thousands of dollars or hundreds of thousands of dollars. This is not meant as a brag, but rather to help you understand that your portfolio will have its ups and downs. The target date retirement funds are designed to become less risky (more conservative) over time, but that doesn't mean losses still won't occur. They will, and while the percentage losses will be less, the dollar losses will likely be greater. Here's an example:

Say you're 24 and you have $11,000 invested. Your target date fund is 90% stocks and 10% bonds. Stock market loses 50% (assume bonds remain unchanged, no losses, no gains). If 90% of your money loses 50% your total loss is 45%. You're $11,000 would drop $4,950 and only be worth $6,050.

Now say you're 64 and you have $1,100,000 invested (100X what you have now, could happen if you earn 7% over 40 years of $5,500 annual investments). But your portfolio is 45/55 (stock/bond) which is half as risky as what you have now. Let's say the stock market falls 50% again. What's your percentage loss? Half as much (45% X 50% = 22.5% loss). Smaller loss than 45% right? But what's a 22.5% loss on a $1,100,000 portfolio? $247,500. That's the loss. Your portfolio (more conservate, with smaller percentage losses) actually has larger dollar losses. Your $1,100,000 would be worth $852,500. Be prepared for losses at every stage of your life.

Also invest money whenever you get it.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

NYCwriter
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by NYCwriter » Sat Dec 22, 2018 11:27 pm

Arctic is a tough act to follow :) I always add the entire amount in Jan. I plan for it, since I get an inherited IRA distribution in Jan that makes up half, and I make up the difference. One and done.

Your q is whether to add the entire amount now to your fund or DCA. The answer is "it depends."

1. Don't tap into an emergency fund or needed savings for the entire amount. If adding the whole amount means dipping too heavily, split the difference.*

2. Market timing is always a gamble, so don't let this factor heavily in your decision.

A target fund is already balanced, so it just comes down to what works for you. Remember that Vanguard pays over 2% now for settled (non-invested) money held in any account, and more for Prime MM.

Last year I put the entire amount in as I always do, but after balancing between equity and total bond I held a small amount as cash. This was more an emotional comfort strategy as anything else, as I was worried about principal loss. But (see #2) it probably didn't make much of a difference over time.

*if you have a taxable, you can use the Roth to hold extra cash that earns interest, but this is not typical for younger investors.

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randydimera
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by randydimera » Sat Dec 22, 2018 11:37 pm

arcticpineapplecorp. wrote:
Sat Dec 22, 2018 10:46 pm
we'll start with a couple of assumptions (these both could be wrong because you didn't specify in your OP. So garbage in garbage out). That being said, let's assume:
1. you're in the target date 2065 fund since you're so young and
2. you invested all $5,500 for 2018 on January 2, 2018.

This target date fund (2065) is down 10.65% year to date (source: https://quotes.morningstar.com/chart/fu ... A%5B%5D%7D)

If #1 and #2 are true, you're $5,500 investment on Jan 2, 2018 has fallen by 10.65% ($585.75) and is now only worth $4,914.25.

if you put another $5,500 in all at once on January 2, 2019 and the market drops afterward, your portfolio will be worth less. How much less? Depends on how much more the market has yet to fall. Why don't we say it falls a dramatic amount (like 2008-2009 amounts)...that would be a 50% decline. What would you have if your $5,500 that's now worth $4.914.25 PLUS your new investment of $5,500 (on Jan 2, 2019) falls another 50%?

$4,914.25 + $5,500 = $10,414.25 (Jan 2, 2019) then...

If $10,414.25 falls 50% you'd have $5,207.13.

Will watching your original investment(s) of $11,000 ($5500 for 2018 and $5500 for 2019) drop to $5,207.13 change your life? I'd venture to say, probably not. After all could you retire on $11,000 anyway (your two Roth investments for 2018 and 2019)? If not, you couldn't retire on $5,207.13 either. Either way, you've got a long way to go and more to accumulate. Investing is a marathon, not a sprint. So you've got to keep socking it away for decades. Don't focus on one year at a time. It's relatively meaningless in the grand scheme of things.

You'll also lose far more than this at times the longer you invest. Talk to some people here who have seen their portfolios rise and fall by tens of thousands of dollars or hundreds of thousands of dollars. This is not meant as a brag, but rather to help you understand that your portfolio will have its ups and downs. The target date retirement funds are designed to become less risky (more conservative) over time, but that doesn't mean losses still won't occur. They will, and while the percentage losses will be less, the dollar losses will likely be greater. Here's an example:

Say you're 24 and you have $11,000 invested. Your target date fund is 90% stocks and 10% bonds. Stock market loses 50% (assume bonds remain unchanged, no losses, no gains). If 90% of your money loses 50% your total loss is 45%. You're $11,000 would drop $4,950 and only be worth $6,050.

Now say you're 64 and you have $1,100,000 invested (100X what you have now, could happen if you earn 7% over 40 years of $5,500 annual investments). But your portfolio is 45/55 (stock/bond) which is half as risky as what you have now. Let's say the stock market falls 50% again. What's your percentage loss? Half as much (45% X 50% = 22.5% loss). Smaller loss than 45% right? But what's a 22.5% loss on a $1,100,000 portfolio? $247,500. That's the loss. Your portfolio (more conservate, with smaller percentage losses) actually has larger dollar losses. Your $1,100,000 would be worth $852,500. Be prepared for losses at every stage of your life.

Also invest money whenever you get it.
I appreciate your long post here. To summarize you are saying that in the big picture of things, it doesnt matter when to invest it right now, aslong as I get it invested in the first place right? Because even if my 5k goes down this year, that extra 5k that ill have in it this year might double in 20 years anyway correct? Not really sure how to say that clearly but it sort of makes sense in my mind lol

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randydimera
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by randydimera » Sat Dec 22, 2018 11:39 pm

NYCwriter wrote:
Sat Dec 22, 2018 11:27 pm
Arctic is a tough act to follow :) I always add the entire amount in Jan. I plan for it, since I get an inherited IRA distribution in Jan that makes up half, and I make up the difference. One and done.

Your q is whether to add the entire amount now to your fund or DCA. The answer is "it depends."

1. Don't tap into an emergency fund or needed savings for the entire amount. If adding the whole amount means dipping too heavily, split the difference.*

2. Market timing is always a gamble, so don't let this factor heavily in your decision.

A target fund is already balanced, so it just comes down to what works for you. Remember that Vanguard pays over 2% now for settled (non-invested) money held in any account, and more for Prime MM.

Last year I put the entire amount in as I always do, but after balancing between equity and total bond I held a small amount as cash. This was more an emotional comfort strategy as anything else, as I was worried about principal loss. But (see #2) it probably didn't make much of a difference over time.

*if you have a taxable, you can use the Roth to hold extra cash that earns interest, but this is not typical for younger investors.
By having some in cash, you meant you left some in your vanguard money market fund right? I could probably do that because itll accrue money there way more than it would in my checking account at first Tennessee bank. (0.1%)

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arcticpineapplecorp.
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by arcticpineapplecorp. » Sun Dec 23, 2018 10:15 am

randydimera wrote:
Sat Dec 22, 2018 11:37 pm
I appreciate your long post here. To summarize you are saying that in the big picture of things, it doesnt matter when to invest it right now, aslong as I get it invested in the first place right? Because even if my 5k goes down this year, that extra 5k that ill have in it this year might double in 20 years anyway correct? Not really sure how to say that clearly but it sort of makes sense in my mind lol
yes, and by the way the limit for a Roth IRA for a 24 year old in 2019 is $6,000 not $5,500 (provided you have at least earned income of $6,000 in 2019). The limits for IRAs are going up next year (to $6,000 if under 50 and $7,000 if 50 or older).

So put in $6,000, not $5,500! (you can redo the math using $6,000 instead of $5,500 if you want to have some fun)

I would put it in all at once right away because if the market goes up instead of down and you're on the sidelines, you've missed out on gains. If it goes down, how much are you really losing in the grand scheme of things? Not much. But giving up gains? Isn't that the point of investing...to get those gains?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

justsomeguy2018
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by justsomeguy2018 » Sun Dec 23, 2018 4:56 pm

arcticpineapplecorp. wrote:
Sun Dec 23, 2018 10:15 am
randydimera wrote:
Sat Dec 22, 2018 11:37 pm
I appreciate your long post here. To summarize you are saying that in the big picture of things, it doesnt matter when to invest it right now, aslong as I get it invested in the first place right? Because even if my 5k goes down this year, that extra 5k that ill have in it this year might double in 20 years anyway correct? Not really sure how to say that clearly but it sort of makes sense in my mind lol
yes, and by the way the limit for a Roth IRA for a 24 year old in 2019 is $6,000 not $5,500 (provided you have at least earned income of $6,000 in 2019). The limits for IRAs are going up next year (to $6,000 if under 50 and $7,000 if 50 or older).

So put in $6,000, not $5,500! (you can redo the math using $6,000 instead of $5,500 if you want to have some fun)

I would put it in all at once right away because if the market goes up instead of down and you're on the sidelines, you've missed out on gains. If it goes down, how much are you really losing in the grand scheme of things? Not much. But giving up gains? Isn't that the point of investing...to get those gains?
If the market goes up 10% in the short term but then drops another 30% then you gave up nothing. The only gains actually lost are dividend payments which aren't much. Seems to me the only gains that matter are the gains that happen right before you prepare to withdrawal.

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arcticpineapplecorp.
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by arcticpineapplecorp. » Sun Dec 23, 2018 6:36 pm

justsomeguy2018 wrote:
Sun Dec 23, 2018 4:56 pm
If the market goes up 10% in the short term but then drops another 30% then you gave up nothing. The only gains actually lost are dividend payments which aren't much. Seems to me the only gains that matter are the gains that happen right before you prepare to withdrawal.
I'm not sure I understand this. Using your example:

If you invest $6000 and it goes up 10% you now have $6,600.
If it then drops 30% it goes down to $4,620 ($6,600 X .70 = $4,620).

So your $6,000 is now only worth $4,620 in the example you cite. Am I missing something from the percentages you listed above?

So not sure how the math works in your example that you "gave up nothing."

I still agree it's best to focus on the long term (so I agree with the last part of your post) that what matters is how much you've made on your $6,000 investment over presumably the next 40 years (if you're only 24 now and looking to retire at a "normal" retirement age).
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

Dontridetheindexdown
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by Dontridetheindexdown » Sun Dec 23, 2018 6:42 pm

Yes, for sure!

We will invest $7,000 each ($14,000 total) on 02 JAN 19, in common stock!

This may be the best buying opportunity in a long time.

We prefer large-cap high-dividend stocks (at 10-year low prices), but you should invest in whatever is most comfortable for you!

justsomeguy2018
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by justsomeguy2018 » Sun Dec 23, 2018 8:29 pm

arcticpineapplecorp. wrote:
Sun Dec 23, 2018 6:36 pm
justsomeguy2018 wrote:
Sun Dec 23, 2018 4:56 pm
If the market goes up 10% in the short term but then drops another 30% then you gave up nothing. The only gains actually lost are dividend payments which aren't much. Seems to me the only gains that matter are the gains that happen right before you prepare to withdrawal.
I'm not sure I understand this. Using your example:

If you invest $6000 and it goes up 10% you now have $6,600.
If it then drops 30% it goes down to $4,620 ($6,600 X .70 = $4,620).

So your $6,000 is now only worth $4,620 in the example you cite. Am I missing something from the percentages you listed above?

So not sure how the math works in your example that you "gave up nothing."

I still agree it's best to focus on the long term (so I agree with the last part of your post) that what matters is how much you've made on your $6,000 investment over presumably the next 40 years (if you're only 24 now and looking to retire at a "normal" retirement age).
You gave up nothing vs if you WAITED and invested after it had dropped 30% after going up 10%.

Seems like a lpt of the assumptions on this forum are based on the 10 year bull-run run up in prices that happened. When asset prices are declining there are no gains you are losing by waiting.

My comment was a response to another comment "...if you wait you miss out on all the gains..."

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arcticpineapplecorp.
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by arcticpineapplecorp. » Sun Dec 23, 2018 8:54 pm

justsomeguy2018 wrote:
Sun Dec 23, 2018 8:29 pm
Seems like a lpt of the assumptions on this forum are based on the 10 year bull-run run up in prices that happened. When asset prices are declining there are no gains you are losing by waiting.
Are you suggesting the OP wait?

If so, could it be you are making an assumption as well...namely, that asset prices are declining. We only know that they have declined. We don't know whether they will continue to decline, or by how much. Saying they are declining is assuming that they will continue to do so. They may, they may not. All we can say is that they have declined.

Because we don't know what will happen, we invest according to our AA and when money becomes available to us. To do anything otherwise is an attempt at market timing, pure and simple.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

justsomeguy2018
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by justsomeguy2018 » Mon Dec 24, 2018 11:52 am

arcticpineapplecorp. wrote:
Sun Dec 23, 2018 8:54 pm
justsomeguy2018 wrote:
Sun Dec 23, 2018 8:29 pm
Seems like a lpt of the assumptions on this forum are based on the 10 year bull-run run up in prices that happened. When asset prices are declining there are no gains you are losing by waiting.
Are you suggesting the OP wait?

If so, could it be you are making an assumption as well...namely, that asset prices are declining. We only know that they have declined. We don't know whether they will continue to decline, or by how much. Saying they are declining is assuming that they will continue to do so. They may, they may not. All we can say is that they have declined.

Because we don't know what will happen, we invest according to our AA and when money becomes available to us. To do anything otherwise is an attempt at market timing, pure and simple.
My suggestion is they do some portion as lump sum(70%?), and DCA the rest, given the volatility of the market.

But my comment about "giving up nothing" is in referencr to this:

 "Would put it in all at once right away because if the market goes up instead of down and you're on the sidelines, you've missed out on gains. If it goes down, how much are you really losing in the grand scheme of things? Not much. But giving up gains? Isn't that the point of investing...to get those gains?"

My only point is any short-term upward movement isn't really a "gain" if it subsequently falls back down. E.g. esrlier this year some have talked about "you missed out on all the gains in 2018 if you sold in Dec 2017" when the market was roaring earlier in the year, but if you sold in Dec 2017, it now turns out that you missed out on nothing, other than dividend payments.

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arcticpineapplecorp.
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by arcticpineapplecorp. » Mon Dec 24, 2018 12:54 pm

justsomeguy2018 wrote:
Mon Dec 24, 2018 11:52 am
My suggestion is they do some portion as lump sum(70%?), and DCA the rest, given the volatility of the market.
But since it's such a small amount ($6000) does it truly matter over the long term whether 30% of that (which would only be $1800) is delayed to purchase shares at lower values? By that logic, wouldn't you just want to keep the entire $6000 back to buy at lower values because it would be better to invest $6000 at lower prices than $1800 at lower prices? See the problem here? You're still assuming and waiting to market time (for lower prices).

Prices may fall (as they have) but then you might continue to wait (as you are now) for the market to fall to even LOWER prices. See how this is nothing more than market timing? You either believe in market timing or you buy and hold and know that sometimes you'll be buying at better prices than others, but you never know when the "best" price will be. Even if you market time, you're still likely to not get the "best" price, because you'll either get in too soon (thinking it won't fall more, then it does) or you'll wait too long (waiting for the market to fall further, and instead it rises and you've missed the boat).
justsomeguy2018 wrote:
Mon Dec 24, 2018 11:52 am
But my comment about "giving up nothing" is in referencr to this:

 "Would put it in all at once right away because if the market goes up instead of down and you're on the sidelines, you've missed out on gains. If it goes down, how much are you really losing in the grand scheme of things? Not much. But giving up gains? Isn't that the point of investing...to get those gains?"

My only point is any short-term upward movement isn't really a "gain" if it subsequently falls back down. E.g. esrlier this year some have talked about "you missed out on all the gains in 2018 if you sold in Dec 2017" when the market was roaring earlier in the year, but if you sold in Dec 2017, it now turns out that you missed out on nothing, other than dividend payments.
This is a matter of taking the wrong perspective again. You've mentioned here twice in one sentence the "short term" (with respect to gains and losses). The investor does not focus on the short term, but instead realizes this is nothing more than noise and instead focuses on the long term and invests money whenever s/he gets it.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

THY4373
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by THY4373 » Mon Dec 24, 2018 1:11 pm

I intend to drop $7k (with my catch contribution) into a trad IRA the first week of January to do a backdoor Roth. I will also likely use the remainder of my year end bonus to partially fund my megabackdoor Roth via my employer. This will also likely go in, in January. I pretty much do this every year and really has nothing to do with the stock market but I hope it does stay down a few more weeks :D .

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mhadden1
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by mhadden1 » Mon Dec 24, 2018 1:19 pm

A good way to think about the likely importance of your Roth timing - when you retire in 35 years or so, you can look at a graph that shows your retirement account balances over time. With luck, it will show a strong trend upward as you look to the right. There will be a little squiggle, or a few, corresponding to your 2019 Roth. Maybe you can make it out with your naked eye. If you are like me, you will definitely need your reading glasses.

Good luck!
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

minesweep
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Re: Should I put another $5500 in the Market on January first for my ROTH IRA?

Post by minesweep » Mon Dec 24, 2018 1:25 pm

ATTENTION: Stock Market Shoppers. There is a holiday sale going on right now.

"Be fearful when others are greedy and be greedy when others are fearful" - Warren Buffet

There's more fear now than there is greed.

You have a long time horizon for the stock market to recover, if it goes down further, (possibly 40 years) so I would do it all at once.

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