Max It Out Tomorrow [your IRA]

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Toons
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Max It Out Tomorrow [your IRA]

Postby Toons » Mon Jan 02, 2017 6:06 pm

That time of year again.
If you have already maxed out your 2016 IRA,
Max Out 2017
Tomorrow,
If able.
"Time,Not Timing"
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

mortfree
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Re: Max It Out Tomorrow

Postby mortfree » Mon Jan 02, 2017 6:16 pm

Added the max on January 1 for 2017 Roth- great advice/reminder!

Will invest it next Tuesday

JD2775
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Re: Max It Out Tomorrow

Postby JD2775 » Mon Jan 02, 2017 6:24 pm

Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.

lack_ey
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Re: Max It Out Tomorrow

Postby lack_ey » Mon Jan 02, 2017 6:26 pm

JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.

This way you don't pay taxes on any fund distributions during the year.

Ron Ronnerson
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Re: Max It Out Tomorrow

Postby Ron Ronnerson » Mon Jan 02, 2017 6:27 pm

JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.


Wife and I put in $11k yesterday. Market is (hopefully) fairly low right now. In fact, there is a possibility that it may never again be as low as it is currently.

JD2775
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Re: Max It Out Tomorrow

Postby JD2775 » Mon Jan 02, 2017 6:48 pm

Ron Ronnerson wrote:
JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.


Wife and I put in $11k yesterday. Market is (hopefully) fairly low right now. In fact, there is a possibility that it may never again be as low as it is currently.
lack_ey wrote:
JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.

This way you don't pay taxes on any fund distributions during the year.


Got it, thanks.

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arcticpineapplecorp.
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Re: Max It Out Tomorrow

Postby arcticpineapplecorp. » Mon Jan 02, 2017 6:53 pm

JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.

high relative to what? depending on when one plans on using the money, which could be 20 or 30 years or more, then the likelihood is the market is lower now than it might be in the future. That doesn't mean it won't fall at some point. But since you can't predict when, how would you feel if the market goes higher in 2017 instead of lower as you presume it might (at some point)?

In addition, history has shown that markets have gone up every 2 out of 3 years (66% of the time roughly). So the odds were in one's favor to lump sum, not DCA. You get more dividend payments (and/or more interest from bonds) the sooner you invest money.

here's some more to read about DCA (what you suggest) vs. lump sum investing:

https://www.bogleheads.org/wiki/Dollar_ ... s_lump_sum
viewtopic.php?t=123543
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livesoft
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Re: Max It Out Tomorrow

Postby livesoft » Mon Jan 02, 2017 6:57 pm

JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.


I am not a fan of dumping in on the first day.

First, there are no distributions scheduled for another month, so there is no rush.

What is the past probabilty that the lowest point of the year occurred in the first 4 trading days of the year?

And I wonder if DCA did better in 2016 than LS on the first day of the year?
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The Wizard
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Re: Max It Out Tomorrow

Postby The Wizard » Mon Jan 02, 2017 7:03 pm

I have more than $6500 available to max my Roth IRA for 2017, via backdoor.
What I don't have is any idea yet whether I'll have any part-time earned income for 2017.
If I do escape the ranks of the unemployed once again, I will make a $3000 IRA contribution when the time is right, and subsequent contribs up to the old folks limit, hopefully...
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fundseeker
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Re: Max It Out Tomorrow

Postby fundseeker » Mon Jan 02, 2017 7:06 pm

JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.


You are wise to think for yourself and ask questions! If your lump sum drops a lot in the next few weeks or months, and you can't stop beating yourself up for not DCAing and you can't sleep, those who suggested the lump sum will be sleeping just fine. Do what is best for you!

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knpstr
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Re: Max It Out Tomorrow

Postby knpstr » Mon Jan 02, 2017 7:11 pm

JD2775 wrote:Can someone explain this to me?
Just curious. Thanks.


Toons did when he said "Time. Not timing." You want to maximize your "time" invested, you don't want to try to get into market "timing".

:beer
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cseinv
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Re: Max It Out Tomorrow

Postby cseinv » Mon Jan 02, 2017 7:38 pm

According to the Intelligent Investor by Benjamin Graham:

"According to Ibbotson Associates, the leading financial research
firm, if you had invested $12,000 in the Standard & Poor’s 500-stock
index at the beginning of September 1929, 10 years later you would
have had only $7,223 left. But if you had started with a paltry $100
and simply invested another $100 every single month, then by August
1939, your money would have grown to $15,571! That’s the power of
disciplined buying—even in the face of the Great Depression and the
worst bear market of all time. "

This is why dollar-cost averaging is better if you can do it for the long periods as in this
research study show.

cseinv

Happy 2017.

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baw703916
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Re: Max It Out Tomorrow

Postby baw703916 » Mon Jan 02, 2017 7:44 pm

I appreciate Graham's larger point of continuing to invest through severe downturns.

But...how did one invest in the S&P 500 in 1929??? :beer
Most of my posts assume no behavioral errors.

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obafgkm
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Re: Max It Out Tomorrow

Postby obafgkm » Mon Jan 02, 2017 7:48 pm

JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.
lack_ey wrote:This way you don't pay taxes on any fund distributions during the year.

JD2775 wrote:Got it, thanks.

Unfortunately, I don't get it at all. What taxes need to be paid on an investment in an IRA? Aren't they, you know, tax-deferred?

mortfree
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Re: Max It Out Tomorrow

Postby mortfree » Mon Jan 02, 2017 7:50 pm

obafgkm wrote:
JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.
lack_ey wrote:This way you don't pay taxes on any fund distributions during the year.

JD2775 wrote:Got it, thanks.

Unfortunately, I don't get it at all. What taxes need to be paid on an investment in an IRA? Aren't they, you know, tax-deferred?



I thought maybe they were funding the IRA with money invested in a taxable account

livesoft
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Re: Max It Out Tomorrow

Postby livesoft » Mon Jan 02, 2017 7:53 pm

mortfree wrote:I thought maybe they were funding the IRA with money invested in a taxable account

Yes, they should have been fully invested already with that money in a taxable account, so they should have sold a last week to have the cash available to contribute to the IRA. Otherwise, if it was in cash, then they were market timing by waiting until the New Year to put it into the market in their IRA --- unless they were just putting it into cash in the IRA for more market timing purposes. But then there would be no real need to "Max It Out Tomorrow."
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Re: Max It Out Tomorrow

Postby madbrain » Mon Jan 02, 2017 7:56 pm

I'm right around the income threshold where I am eligible for Roth contribution or not. I don't know whether to make a non-deductible contribution to a traditional IRA and then convert; or direct Roth contribution. I likely won't know until December of 2017. Just like in 2016 - I made my contributions last month. I have been bit before and had to withdraw Roth contributions, and pay taxes & penalties on earnings. Never again.

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baw703916
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Re: Max It Out Tomorrow

Postby baw703916 » Mon Jan 02, 2017 7:59 pm

livesoft wrote:
mortfree wrote:I thought maybe they were funding the IRA with money invested in a taxable account

Yes, they should have been fully invested already with that money in a taxable account, so they should have sold a last week to have the cash available to contribute to the IRA.


Or, depending on the size of the taxable account, use the year-end distributions to fund the IRA.
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danaht
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Re: Max It Out Tomorrow

Postby danaht » Mon Jan 02, 2017 8:10 pm

I plan to max it out in the first two weeks of 2017 when I get enough money. The only bad thing about this is the possibility of dealing with an excess contribution. Those are a pain to deal with. I'm usually really close to the lower floor of having to pro-rate the $5,500. (this is after fully contributing to a 401k and HSA). If I dollar cost average - I might be able to avoid that excess contribution headache.

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FIREchief
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Re: Max It Out Tomorrow

Postby FIREchief » Mon Jan 02, 2017 8:16 pm

Toons wrote:That time of year again.
If you have already maxed out your 2016 IRA,
Max Out 2017
Tomorrow,
If able.
"Time,Not Timing"
:mrgreen:


Great reminder, but we need to add max 2017 HSA contributions and the first Roth Conversion Frog as well! 8-)

"Get 'em out there" :sharebeer

pasadena
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Re: Max It Out Tomorrow

Postby pasadena » Mon Jan 02, 2017 8:18 pm

I sent the order yesterday for VG to pull $5,500 from my Ally savings account to my tIRA. The money should get there around Wednesday, and I'll backdoor it to my Roth as soon as it clears (7 days :( ).

Now, Ladies and Gentlemen, market timers, I can tell you with near certainty than VBTLX will recover its losses from tomorrow to next Wednesday. Brought to you by my usual track record with Murphy's Law!

mortfree
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Re: Max It Out Tomorrow

Postby mortfree » Mon Jan 02, 2017 8:20 pm

cseinv wrote:According to the Intelligent Investor by Benjamin Graham:

"According to Ibbotson Associates, the leading financial research
firm, if you had invested $12,000 in the Standard & Poor’s 500-stock
index at the beginning of September 1929, 10 years later you would
have had only $7,223 left. But if you had started with a paltry $100
and simply invested another $100 every single month, then by August
1939, your money would have grown to $15,571! That’s the power of
disciplined buying—even in the face of the Great Depression and the
worst bear market of all time. "

This is why dollar-cost averaging is better if you can do it for the long periods as in this
research study show.

cseinv

Happy 2017.



Pretty good example but this isn't the approach most people are taking. They are lump summing 5500 every year. The example just let 12k ride with no more contributions.

pasadena
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Re: Max It Out Tomorrow

Postby pasadena » Mon Jan 02, 2017 8:24 pm

cseinv wrote:According to the Intelligent Investor by Benjamin Graham:

"According to Ibbotson Associates, the leading financial research
firm, if you had invested $12,000 in the Standard & Poor’s 500-stock
index at the beginning of September 1929, 10 years later you would
have had only $7,223 left. But if you had started with a paltry $100
and simply invested another $100 every single month, then by August
1939, your money would have grown to $15,571! That’s the power of
disciplined buying—even in the face of the Great Depression and the
worst bear market of all time. "

This is why dollar-cost averaging is better if you can do it for the long periods as in this
research study show.

cseinv

Happy 2017.


Or, it's better if you do it during the worst bear market of all times instead of lump summing right before the worst crash of all times.

This is called confirmation bias.

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neurosphere
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Re: Max It Out Tomorrow

Postby neurosphere » Mon Jan 02, 2017 8:29 pm

livesoft wrote:I am not a fan of dumping in on the first day.

First, there are no distributions scheduled for another month, so there is no rush.

What is the past probabilty that the lowest point of the year occurred in the first 4 trading days of the year?

And I wonder if DCA did better in 2016 than LS on the first day of the year?


Wouldn't it be easy to check historical performance of contributing the first week of January vs the last week of December vs. some intermediate strategy? Well, not easy for me, but easy for some. :D

Bacchus01
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Re: Max It Out Tomorrow

Postby Bacchus01 » Mon Jan 02, 2017 9:03 pm

Each year I max out on Jan 1 or as soon after:

- two IRAs for backdoor
- 5 X 529s
- Hsa

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Epsilon Delta
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Re: Max It Out Tomorrow

Postby Epsilon Delta » Mon Jan 02, 2017 9:05 pm

madbrain wrote:I'm right around the income threshold where I am eligible for Roth contribution or not. I don't know whether to make a non-deductible contribution to a traditional IRA and then convert; or direct Roth contribution. I likely won't know until December of 2017.

Just do the backdoor in January. There will be no penalties if it turns out you could have made a direct Roth contribution.

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Toons
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Re: Max It Out Tomorrow

Postby Toons » Mon Jan 02, 2017 9:07 pm

Bacchus01 wrote:Each year I max out on Jan 1 or as soon after:

- two IRAs for backdoor
- 5 X 529s
- Hsa


+5
The best yet.
Simple.
To The Point.
Effective.
Put the compounding machine to work ASAP :sharebeer
"Time NOT Timing"
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Toons
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Re: Max It Out Tomorrow

Postby Toons » Mon Jan 02, 2017 9:08 pm

FIREchief wrote:
Toons wrote:That time of year again.
If you have already maxed out your 2016 IRA,
Max Out 2017
Tomorrow,
If able.
"Time,Not Timing"
:mrgreen:


Great reminder, but we need to add max 2017 HSA contributions and the first Roth Conversion Frog as well! 8-)

"Get 'em out there" :sharebeer



:sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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gasdoc
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Re: Max It Out Tomorrow

Postby gasdoc » Mon Jan 02, 2017 9:09 pm

I will be dollar cost averaging- $XXX each January for as long as I am able!

Gasdoc

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Re: Max It Out Tomorrow

Postby abuss368 » Mon Jan 02, 2017 9:48 pm

Very good reminder.
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Re: Max It Out Tomorrow

Postby abuss368 » Mon Jan 02, 2017 9:49 pm

We have typically funded the accounts with cash flows over the year.
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ff4930
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Re: Max It Out Tomorrow

Postby ff4930 » Mon Jan 02, 2017 9:50 pm

Contributed to 2017 Roth IRA 1/1/2017 :)

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House Blend
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Don't Max It Out Tomorrow

Postby House Blend » Mon Jan 02, 2017 9:55 pm

Don't Max Out Tomorrow.

If you're sitting on $5500/$6500 in cash and waiting to pull the trigger to fill your IRA tomorrow, then the damage is already done.

But in the future, remember that "Time,Not Timing" matters.

That is, you should have invested that money last year, rather than sitting on cash waiting for 2017. If you had dividend income in mid December, you should have re-invested it (or spent it) in mid December.

A Boglehead does not limit her capacity for investment to whatever can fit into an IRA.

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Re: Max It Out Tomorrow

Postby madbrain » Mon Jan 02, 2017 10:48 pm

Epsilon Delta wrote:
madbrain wrote:I'm right around the income threshold where I am eligible for Roth contribution or not. I don't know whether to make a non-deductible contribution to a traditional IRA and then convert; or direct Roth contribution. I likely won't know until December of 2017.

Just do the backdoor in January. There will be no penalties if it turns out you could have made a direct Roth contribution.


Thanks. That is a possibility. But the tax treatment of backdoor Roth is more complicated, and the rules for withdrawals are stricter, at least when it comes to the first 5 years. I'm probably at the point where this doesn't matter, though, since I still have a very sizable taxable account and my Roth is not my emergency fund. Though, my company just started allowing after-tax 401k contributions, and I am going to be doing Mega Backdoor Roth once again, so eventually the taxable account may dwindle.

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Re: Don't Max It Out Tomorrow

Postby j0nnyg1984 » Mon Jan 02, 2017 10:58 pm

House Blend wrote:Don't Max Out Tomorrow.

If you're sitting on $5500/$6500 in cash and waiting to pull the trigger to fill your IRA tomorrow, then the damage is already done.

But in the future, remember that "Time,Not Timing" matters.

That is, you should have invested that money last year, rather than sitting on cash waiting for 2017. If you had dividend income in mid December, you should have re-invested it (or spent it) in mid December.

A Boglehead does not limit her capacity for investment to whatever can fit into an IRA.


Pretty silly thing to say, actually. Not all of us are interested in, or capable of, taxable investments.

I already invest $5500 IRA, $18000 401k, and $3350 HSA annually, plus the little CD and savings / checking account plays here and there. I don't need, or WANT, any more money invested or subject to losses. It is perfectly acceptable for me to accumulate cash in my savings account over the year before deciding to deploy it on something - paying down my mortgage in large lump sums, personally.

My 2017 rIRA contribution order was submitted on January 1st, btw :)

assetsforallocation
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Re: Max It Out Tomorrow

Postby assetsforallocation » Mon Jan 02, 2017 11:38 pm

Don't forget to max your mega-backdoor Roths IRAs ASAP too, by maxing your "after tax" contributions to your 401k to prepare for conversion!
Fund selection for the holding period is another discussion....

brennok
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Re: Max It Out Tomorrow

Postby brennok » Mon Jan 02, 2017 11:54 pm

Not sure if I will be eligible for the Roth this year so I am undecided what I am going to do this year.

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telemark
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Re: Don't Max It Out Tomorrow

Postby telemark » Tue Jan 03, 2017 1:51 am

House Blend wrote:Don't Max Out Tomorrow.

If you're sitting on $5500/$6500 in cash and waiting to pull the trigger to fill your IRA tomorrow, then the damage is already done.

But in the future, remember that "Time,Not Timing" matters.

That is, you should have invested that money last year, rather than sitting on cash waiting for 2017. If you had dividend income in mid December, you should have re-invested it (or spent it) in mid December.

The money I allocate for my Roth accumulates in a savings account until I can move it into the Roth. Assuming a 7% return in taxable, it might have earned around $225 in that time. Quel dommage!
A Boglehead does not limit her capacity for investment to whatever can fit into an IRA.

It won't be the first time, or even the tenth, that someone here has decided to throw me out of the club. Although the Roth is not in fact my only investment. Oh well.

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Re: Max It Out Tomorrow

Postby sat24 » Tue Jan 03, 2017 1:56 am

Bacchus01 wrote:Each year I max out on Jan 1 or as soon after:

- two IRAs for backdoor
- 5 X 529s (emphasis mine, not from OP)
- Hsa


re: this

What does maxing out 529 mean? I have never been able to figure out what the cap is. Some say 14K per parent per 529 beneficiary, but then some say the limit is much higher than that. (not counting the "5yr mega"-529)

red5
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Re: Max It Out Tomorrow

Postby red5 » Tue Jan 03, 2017 5:16 am

cseinv wrote:According to the Intelligent Investor by Benjamin Graham:

"According to Ibbotson Associates, the leading financial research
firm, if you had invested $12,000 in the Standard & Poor’s 500-stock
index at the beginning of September 1929, 10 years later you would
have had only $7,223 left. But if you had started with a paltry $100
and simply invested another $100 every single month, then by August
1939, your money would have grown to $15,571! That’s the power of
disciplined buying—even in the face of the Great Depression and the
worst bear market of all time. "

This is why dollar-cost averaging is better if you can do it for the long periods as in this
research study show.

cseinv

Happy 2017.




Maxing your IRA every year at the beginning of January is DCAing. Using your example the investor would invest $1,200 every January from 1929 to 1939 (rather than $100 every month for the same time period).

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Toons
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Re: Max It Out Tomorrow

Postby Toons » Tue Jan 03, 2017 5:31 am

ff4930 wrote:Contributed to 2017 Roth IRA 1/1/2017 :)



:thumbsup :thumbsup
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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blaugranamd
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Re: Max It Out Tomorrow

Postby blaugranamd » Tue Jan 03, 2017 6:09 am

I thought of this debate while reading, "A Random Walk Down Wall Street" over the weekend and Malkiel points to a study, I can't find the exact quote at 0600 today, that showed a huge portion of the gains over the last few decades occurred over about 90 or so investing days and missing those days had a significant impact on overall return. I think the point was not trying to time the market but the broader thought could apply here in that the sooner you get your cash in the better odds of not missing those rallys. Sure there's always the odds you end up investing right before a huge crash but that's why you do it every year to average out.

:sharebeer
-- Don't mistake more funds for more diversity: Total Int'l + Total Market = 7k to 10k stocks -- | -- Market return does NOT = average nor 50th percentile, rather 80-90th percentile long term ---

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Re: Max It Out Tomorrow

Postby cherijoh » Tue Jan 03, 2017 6:15 am

livesoft wrote:
mortfree wrote:I thought maybe they were funding the IRA with money invested in a taxable account

Yes, they should have been fully invested already with that money in a taxable account, so they should have sold a last week to have the cash available to contribute to the IRA. Otherwise, if it was in cash, then they were market timing by waiting until the New Year to put it into the market in their IRA --- unless they were just putting it into cash in the IRA for more market timing purposes. But then there would be no real need to "Max It Out Tomorrow."


I don't auto reinvest my dividends in my taxable account - that way I don't have lots of small lots to deal with in the future and I can do some minor rebalancing when I do plow it back into the market. I use the December dividends to fund my Roth IRA in early January irrespective of the market, so it is out of the market for about 2 weeks. FYI - I don't consider that market timing.

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Re: Don't Max It Out Tomorrow

Postby blaugranamd » Tue Jan 03, 2017 6:18 am

House Blend wrote:Don't Max Out Tomorrow.

If you're sitting on $5500/$6500 in cash and waiting to pull the trigger to fill your IRA tomorrow, then the damage is already done.

But in the future, remember that "Time,Not Timing" matters.

That is, you should have invested that money last year, rather than sitting on cash waiting for 2017. If you had dividend income in mid December, you should have re-invested it (or spent it) in mid December.

A Boglehead does not limit her capacity for investment to whatever can fit into an IRA.


Depends on how you do It. Either convert taxable investments to tax sheltered via sales or convert cash emergency funds to Roth "emergency" funds. There's a Wiki article on how to do this to increase investable money.
-- Don't mistake more funds for more diversity: Total Int'l + Total Market = 7k to 10k stocks -- | -- Market return does NOT = average nor 50th percentile, rather 80-90th percentile long term ---

aorin
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Re: Max It Out Tomorrow

Postby aorin » Tue Jan 03, 2017 7:53 am

I will never max out on the first day again, last year sucked! I will be using a plan similar to Livesoft.

red5
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Re: Max It Out Tomorrow

Postby red5 » Tue Jan 03, 2017 8:03 am

aorin wrote:I will never max out on the first day again, last year sucked! I will be using a plan similar to Livesoft.


At first I did not know what you were referring to as "last year sucked!". I looked at prices and saw that Total US Stock dropped about 10% over the first month. Is that what you are referring to?

What happens if the stock market goes up 10% in the first month? Will you then say that this year sucked because you did not max out on the first day?

Hindsight is 20/20.

red5
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Re: Don't Max It Out Tomorrow

Postby red5 » Tue Jan 03, 2017 8:10 am

House Blend wrote:Don't Max Out Tomorrow.

If you're sitting on $5500/$6500 in cash and waiting to pull the trigger to fill your IRA tomorrow, then the damage is already done.

But in the future, remember that "Time,Not Timing" matters.

That is, you should have invested that money last year, rather than sitting on cash waiting for 2017. If you had dividend income in mid December, you should have re-invested it (or spent it) in mid December.

A Boglehead does not limit her capacity for investment to whatever can fit into an IRA.


Not really. I mean for some people it makes complete sense. Perhaps this is so for yourself.

For myself I prioritize IRA contribution at the beginning of the year by "borrowing" from savings/emergency fund. After that I usually don't invest any more money throughout the year with the exception of the minimum amount into the 401k to receive the full match. There are other areas where my money needs to go other than taxable and 401k investing.

I think this serves as a reminder that everyone's situation varies. There are multiple ways to invest in an IRA.

aorin
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Re: Max It Out Tomorrow

Postby aorin » Tue Jan 03, 2017 8:26 am

red5 wrote:
aorin wrote:I will never max out on the first day again, last year sucked! I will be using a plan similar to Livesoft.


At first I did not know what you were referring to as "last year sucked!". I looked at prices and saw that Total US Stock dropped about 10% over the first month. Is that what you are referring to?

What happens if the stock market goes up 10% in the first month? Will you then say that this year sucked because you did not max out on the first day?

Hindsight is 20/20.


Yep if you bought say the S&P 500 Index on January 4th 2016, you were in the hole until march. My Roth has VTI(Total US),VBR(Small Cap Value US),VXUS(Total International), and VSS(Small International). I am betting that at least one of those will be cheaper than today at some point, but you are right I could totally lose out on crazy gains! I will be rooting for an early RBD.

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Toons
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Re: Max It Out Tomorrow

Postby Toons » Tue Jan 03, 2017 8:29 am

JD2775 wrote:Can someone explain this to me?

The market is fairly "high" right now....why would dumping $5500 into it today be better than breaking it up into 12-monthly installments for example? (which I have to do, no choice)

Just curious. Thanks.


This might shed some light.
Do your best to grasp the concept of compounding
Once you get it,it will make all the difference in the world when it comes to long term investing :mrgreen:

"To work, it requires two things: the re-investment of earnings and time."
The concept of compounding
http://www.investopedia.com/university/ ... inner2.asp
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

red5
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Re: Max It Out Tomorrow

Postby red5 » Tue Jan 03, 2017 8:34 am

aorin wrote:Yep if you bought say the S&P 500 Index on January 4th 2016, you were in the hole until march. My Roth has VTI(Total US),VBR(Small Cap Value US),VXUS(Total International), and VSS(Small International). I am betting that at least one of those will be cheaper than today at some point, but you are right I could totally lose out on crazy gains! I will be rooting for an early RBD.


Over a 60 year investing timeframe a 10% hole for two months will be a mere blip. However, I genuinely hope the best for you and everyone else, no matter what the plan is.


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