Roth IRA's and excess cash...

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SoDakJeff
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Joined: Mon Mar 13, 2017 11:48 am

Roth IRA's and excess cash...

Post by SoDakJeff » Fri Apr 28, 2017 9:00 am

Early next week, I'll be moving my and my wife's Roth IRA's from Waddell & Reed over to Vanguard. I currently have more money in savings accounts and taxable funds than I'm comfortable with. I was thinking I'd just go ahead and use some of that cash to make lump some payments to both of those IRA's and max them out for the rest of the year. Then I started wondering if that was the smart way to go. What's the general thinking on this - is a lump sum fairly early in the year, giving it longer to grow better than dollar cost averaging for the rest of the year?

Thanks

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Bruce
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Location: Alaska

Re: Roth IRA's and excess cash...

Post by Bruce » Fri Apr 28, 2017 9:22 am

Max out those contributions as early in the year as possible, and then build up enough cash so you can do it again January 1 of the next year.

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Bruce | | Winner of the 2017 Bogleheads Contest | | "Simplicity is the master key to financial success."

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flamesabers
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Location: Rochester, MN

Re: Roth IRA's and excess cash...

Post by flamesabers » Fri Apr 28, 2017 9:35 am

OP,

Since you have the money, I recommend maxing out your IRA contributions right away. The more time your IRA has to accumulate earnings, the better. Generally I think the only reason to hold back on making IRA contributions is if you're uncertain about having enough earned income for the year to hit the $5.5k limit.

I make my full IRA contribution on January 2nd of every year.

livesoft
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Re: Roth IRA's and excess cash...

Post by livesoft » Fri Apr 28, 2017 9:38 am

You know there is no way to predict the future. We can only look at the past. Whether LS or DCA will be better for 2017 from this time point going forward is completely unknown. One can say that if you LS now, then there is more time for the stock market to tank.
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Topic Author
SoDakJeff
Posts: 81
Joined: Mon Mar 13, 2017 11:48 am

Re: Roth IRA's and excess cash...

Post by SoDakJeff » Fri Apr 28, 2017 11:42 am

Thanks. I think I'll go with the lump sums. That excess cash is really making my AA look out of whack, and this should help a little.

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