Considering lump sum Roth IRAs on Jan 2

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runner9
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Considering lump sum Roth IRAs on Jan 2

Post by runner9 » Fri Dec 20, 2019 6:16 pm

I've always dollar cost averaged our Roths, this year doing $500 on the 6th and 20th of each month for $12K total across our 2 Roths.

We have the cash, have no debt, etc. I've read the wiki about lump sum instead (https://www.bogleheads.org/wiki/Dollar_ ... s_lump_sum)

I'm 90% ready to do it. I just need a little push I guess. It will make my life a bit simpler not having to balance and add twice a month. It should be better financially 67% of the time.

If I don't want to go all in there close alternative? Half each on Jan 2 and July 2?

Thanks!

Silk McCue
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Re: Considering lump sum Roth IRAs on Jan 2

Post by Silk McCue » Fri Dec 20, 2019 6:25 pm

If you don’t need the money anytime soon just dump it in.

You don’t need us to help you make this decision. Do or don’t do. It’s your call.

Cheers

HomeStretch
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Re: Considering lump sum Roth IRAs on Jan 2

Post by HomeStretch » Fri Dec 20, 2019 6:26 pm

Lump sum or DCA is a personal choice. I am a proponent of lump sum contributions. For $6k, make your life simpler by doing a lump sum.

Quaestner
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Re: Considering lump sum Roth IRAs on Jan 2

Post by Quaestner » Fri Dec 20, 2019 6:32 pm

Here's another nudge: That Roth cash you have ready will earn interest in 2020, which you will pay taxes on. So, the quick lump sum contribution will not only get you in the market quicker, but cut your 2020 tax bill as well. (Admittedly, by a tiny amount!) I'm doing the contributions in January, just like you (?).

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1789
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Re: Considering lump sum Roth IRAs on Jan 2

Post by 1789 » Fri Dec 20, 2019 6:32 pm

We are going to dumb 12k for me and wife in our Roth IRAs (backdoor) on Jan 2nd. I recommend you do the same.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

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TierArtz
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Re: Considering lump sum Roth IRAs on Jan 2

Post by TierArtz » Fri Dec 20, 2019 6:40 pm

I'm maxing personal and spousal IRAs on 02 January. The VG taxable settlement fund is preloaded with the $$ to purchase MM in a tIRA. Biweekly contributions to other accounts is enough DCA for me. As Larry the Cable Guy says: "Get 'Er done!"

Spedward
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Re: Considering lump sum Roth IRAs on Jan 2

Post by Spedward » Fri Dec 20, 2019 6:45 pm

For the past few year, I have just done backdoor Roths in early January for the full amounts, but have monthly purchases fund purchases set up. I set up the monthly purchases a number of years ago, and by the time December 31 rolls around, the cash balance is next to zero, but for the small interest the MMF pays. So I just have to contribute and Jan and do not have to mess around with adjusting the auto purchases.

Looking back over the last few years, lump sums would be better, but oh well.... I am sure if I would have lump summed it, the markets would have tanked the last few years.... Everyone should be thanking me =).

mortfree
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Re: Considering lump sum Roth IRAs on Jan 2

Post by mortfree » Fri Dec 20, 2019 6:50 pm

I put a lump sum 6k in VBIAX early Jan 2019. It’s worth around $7400 now.

I’ll put the next lump sum 6k in early Jan 2020.

It’s a Roth account at Vanguard.

02nz
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Re: Considering lump sum Roth IRAs on Jan 2

Post by 02nz » Fri Dec 20, 2019 6:56 pm

Frankly, the amount of time you took to post this and read the responses is already too much for this question. If you have the cash to put it all in in January, then just do it. It's not really "lump sum" - since presumably you're going to continue to contribute the max every year, you're really doing DCA either way, just a question of whether the frequency is annual or monthly. The reason to consider partial or full DCA for say $100K is to mitigate the risk of feeling great regret if the market tanks right after you buy in. If there's a risk you'll feel great regret over a $6K investment - enough regret to do something stupid - then you need to re-consider your risk tolerance.

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runner9
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Re: Considering lump sum Roth IRAs on Jan 2

Post by runner9 » Sat Dec 21, 2019 8:42 am

Thanks all. We also simplified to a 3 fund plan in January so that makes it easier, less buckets to balance. I'll put the order in on new years day:)

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Wiggums
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Re: Considering lump sum Roth IRAs on Jan 2

Post by Wiggums » Sat Dec 21, 2019 8:46 am

runner9 wrote:
Sat Dec 21, 2019 8:42 am
Thanks all. We also simplified to a 3 fund plan in January so that makes it easier, less buckets to balance. I'll put the order in on new years day:)
I like lump sum, but either way is fine. Glad you made the decision and now you can do some fun stuff...

Lazareth
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Re: Considering lump sum Roth IRAs on Jan 2

Post by Lazareth » Sat Dec 21, 2019 9:02 am

We'll dump in $14,000 using the catch-up, on Jan 2. My wife, "...you're actually looking forward to January 2nd, like we're going on vacation or something." :P
a/66, retired, married, enjoy p/t employment.

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ruralavalon
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Re: Considering lump sum Roth IRAs on Jan 2

Post by ruralavalon » Sat Dec 21, 2019 3:13 pm

runner9 wrote:
Sat Dec 21, 2019 8:42 am
Thanks all. We also simplified to a 3 fund plan in January so that makes it easier, less buckets to balance. I'll put the order in on new years day:)
That's a good decision in my opinion.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

retiredjg
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Re: Considering lump sum Roth IRAs on Jan 2

Post by retiredjg » Sat Dec 21, 2019 3:17 pm

If I had the cash ready, I'd do it all the first week of January. The only problem that I can see if if you unexpectedly become ineligible to contribute directly to Roth IRA. That can be remedied easily if you have no other traditional IRAs.

jeremyl
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Re: Considering lump sum Roth IRAs on Jan 2

Post by jeremyl » Sat Dec 21, 2019 5:18 pm

Many here say time in the market is key therefore lump sum rather than dca. Maxed 2019 Roth in June (earliest ever). I've been fortunate to see it go up alot with this year's run. Finally able to max on January 2 and have the whole year in the market. 6k now rather than the slow 500/month appeals to me now that I'm able to do this.

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