Max It Out Tomorrow [your IRA]

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guitarguy
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Re: Max It Out Tomorrow [your IRA]

Postby guitarguy » Wed Jan 04, 2017 7:57 am

Interesting.

Over the past couple of years we've finally made it to the point where we can max out both Roth IRA's. Now all that's left is to tick up 401k contributions 1%...or more if we can swing it...per year until those are maxed as well. Right now we're at a savings rate of 23% of gross income. No taxable accounts as of yet. We are saving for car fund and so forth in cash.

Thinking we're doing pretty good. :D

Now I get on here and have to read about lump sum vs DCA?? :oops: :greedy

We'll stick with $458/m for now!

*3!4!/5!
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Re: Max It Out Tomorrow [your IRA]

Postby *3!4!/5! » Wed Jan 04, 2017 8:03 am

guitarguy wrote:Now I get on here and have to read about lump sum vs DCA?? :oops: :greedy


"lump sum vs DCA" is easy.

"lump sum investing" is when you invest exactly once in your entire life.

"DCA" is when you invest more than once in your entire life.

"not investing at all" is when you invest less than once in your entire life.

guitarguy
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Re: Max It Out Tomorrow [your IRA]

Postby guitarguy » Wed Jan 04, 2017 8:26 am

*3!4!/5! wrote:
guitarguy wrote:Now I get on here and have to read about lump sum vs DCA?? :oops: :greedy


"lump sum vs DCA" is easy.

"lump sum investing" is when you invest exactly once in your entire life.

"DCA" is when you invest more than once in your entire life.

"not investing at all" is when you invest less than once in your entire life.


I understand the concept. I was more tongue in cheek joking about the fact that just maxing out the Roth contributions isn't enough.

BH's are even maximizing HOW they maximize. :wink:

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blaugranamd
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Re: Max It Out Tomorrow [your IRA]

Postby blaugranamd » Wed Jan 04, 2017 12:27 pm

As you may have noticed, there's a lot of opinions on how best to invest, but at this point it's getting into the hair-splitting and investment theory of this all. You've done the most important part: focus on maximizing your savings and tax-advantages.

:sharebeer

As for your above questions, lump-sum vs DCA is usually a topic reserved for things like large windfalls or inheritances aka: inherited $120k, should you put $120k into your mutual funds right now or split it into $12k/month. That, IMO, is the traditional understanding of DCA: as a strategy to move a lump-sum of cash into the market gradually. I guess the Investopedia folks simplify it down to "regular purchasing of fixed dollar amounts of securities" which fits this mentality as well.

Personally, I think it's a bit of a stretch to say that putting our $5,500 IRA limit into your IRA on Jan 1 is DCA'ing your overall lifetime IRA contributions. It's certainly DCA to say you have $5,500 in cash and are contributing it to your IRA in 12 monthly installments. It is, IMHO, not DCA if you have $458/mo. that becomes newly available and is immediately invested regularly in your IRA.
-- 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 ---

JD2775
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Re: Max It Out Tomorrow [your IRA]

Postby JD2775 » Wed Jan 04, 2017 1:41 pm

guitarguy wrote:Interesting.

Now I get on here and have to read about lump sum vs DCA?? :oops: :greedy

We'll stick with $458/m for now!


No problems with that, it's the same thing I do. Sure, I could take $5500 out of my savings and invest it upfront and then pay back my savings account but I don't see the need. So $458/month it is.

barnaclebob
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Re: Max It Out Tomorrow

Postby barnaclebob » Wed Jan 04, 2017 2:08 pm

aorin wrote:
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.


I dont know what you are talking about, the beginning of last year was awesome. My wife and I had 20k out of the market while our Mega backdoor roth checks were in the mail...

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Toons
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Re: Max It Out Tomorrow

Postby Toons » Wed Jan 04, 2017 6:26 pm

orca91 wrote:I maxed mine out today.... $5500 into the balanced index fund.

People, we're talking about $5500 or $6500 (maybe double for a couple), not $5 million. Putting a fairly small amount ASAP in January or spreading it out over months or the year is going to make little difference in the long run. Keep things in perspective. Let's argue about things that actually make a difference, huh? :happy


: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

bantam222
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Re: Max It Out Tomorrow [your IRA]

Postby bantam222 » Thu Jan 05, 2017 5:03 pm

I just completed my back door roth contribution of $5500 today.

Fidelity seems to have a weird bug where I cannot convert traditional to roth the next trading day. I had to wait an additional day to perform the conversion.

Next up for 2017: Max traditional 401k and mega back door roth

Cheers :sharebeer

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Toons
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Re: Max It Out Tomorrow [your IRA]

Postby Toons » Thu Jan 05, 2017 6:17 pm

bantam222 wrote:I just completed my back door roth contribution of $5500 today.

Fidelity seems to have a weird bug where I cannot convert traditional to roth the next trading day. I had to wait an additional day to perform the conversion.

Next up for 2017: Max traditional 401k and mega back door roth

Cheers :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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blaugranamd
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Re: Max It Out Tomorrow [your IRA]

Postby blaugranamd » Thu Jan 05, 2017 11:21 pm

Well after having to maneuver around my banks $5000/day transfer limits between my mortgage transfer and two Roth IRAs I'm all done getting my IRAs fully funded.

: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 ---

island
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Re: Max It Out Tomorrow [your IRA]

Postby island » Sat Jan 07, 2017 12:47 pm

Spouse and I both all in $6500 yesterday, ready for backdoor conversion soon as the funds clear next week.

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blaugranamd
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Re: Max It Out Tomorrow [your IRA]

Postby blaugranamd » Sat Jan 07, 2017 1:32 pm

For those of you who are "all-in January" people, where do you get your funds from or where do you hold your funds until next year?

1. Borrow from emergency fund in January and rebuild over the year
2. Build up separate cash reserves to invest next January
3. Invest in the same funds as your IRA in taxable and sell/"convert" to IRA equivalent shares, TLHing or paying ST/LT cap gains taxes in the process
4. Invest in different funds from your IRA in a taxable account, like a tax-exempt muni bond fund, and convert to cash to transfer into your IRA at your current AA
5. Other? :confused
-- 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 ---

*3!4!/5!
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Re: Max It Out Tomorrow [your IRA]

Postby *3!4!/5! » Sat Jan 07, 2017 1:35 pm

blaugranamd wrote:For those of you who are "all-in January" people, where do you get your funds from or where do you hold your funds until next year?

1. Borrow from emergency fund in January and rebuild over the year
2. Build up separate cash reserves to invest next January
3. Invest in the same funds as your IRA in taxable and sell/convert to IRA equivalent shares, TLHing or paying ST/LT cap gains taxes in the process
4. Invest in different funds from your IRA in a taxable account, like a tax-exempt muni bond fund, and convert to cash to transfer into your IRA at your current AA
5. Other? :confused


I'm maxing out stuff all year, then towards the end of the year I'm done maxing and can save next years IRA from the last few paychecks. So yes I'm guilty of leaving cash uninvested for a month or two before putting it in on Jan 1.

lazydavid
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Re: Max It Out Tomorrow [your IRA]

Postby lazydavid » Sat Jan 07, 2017 2:29 pm

Since I'll be effectively funding my Backdoor Roth from a Taxable account with a similar investment mix*, I don't think it matters much when I actually do it. There may be some slight difference in the amount of gain on the sale, but that should be eaten up by TLH throughout the year--unless the market ONLY goes up, but that's ok with me too. :) Taxable is funded 5 times per year (4xESPP, 1xRSU vestment), the moment the shares become available.

*I can't actually fund the Roth directly from the taxable, since they require deposits in cash. So instead I'll be initiating a contribution from my EF account to the IRA, and at the same time a sale/withdrawal of the same amount from taxable to the EF account. Small risk I'll miss a RGD or RBD in the 1-2 days it takes everything to settle, but more or less continuously invested.

island
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Re: Max It Out Tomorrow [your IRA]

Postby island » Sat Jan 07, 2017 2:38 pm

blaugranamd wrote:For those of you who are "all-in January" people, where do you get your funds from or where do you hold your funds until next year?

1. Borrow from emergency fund in January and rebuild over the year
2. Build up separate cash reserves to invest next January
3. Invest in the same funds as your IRA in taxable and sell/"convert" to IRA equivalent shares, TLHing or paying ST/LT cap gains taxes in the process
4. Invest in different funds from your IRA in a taxable account, like a tax-exempt muni bond fund, and convert to cash to transfer into your IRA at your current AA
5. Other? :confused


I don't invest every cent. Have some cash in bank money market, money left over from paychecks not needed for expenses or invested yet, etc. So I guess you could call it my large emergency fund.

Bacchus01
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Re: Max It Out Tomorrow

Postby Bacchus01 » Sat Jan 14, 2017 3:40 pm

sat24 wrote:
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)


In our state, Wisconsin, there is a tax deduction for $3,100 of contribution. Thus, we contribute $3,100 to each of them each year. One each for three kids and one each for my wife and I.

pasadena
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Re: Max It Out Tomorrow [your IRA]

Postby pasadena » Sat Jan 14, 2017 3:54 pm

blaugranamd wrote:For those of you who are "all-in January" people, where do you get your funds from or where do you hold your funds until next year?

1. Borrow from emergency fund in January and rebuild over the year
2. Build up separate cash reserves to invest next January
3. Invest in the same funds as your IRA in taxable and sell/"convert" to IRA equivalent shares, TLHing or paying ST/LT cap gains taxes in the process
4. Invest in different funds from your IRA in a taxable account, like a tax-exempt muni bond fund, and convert to cash to transfer into your IRA at your current AA
5. Other? :confused


The first year I did 1 (FY2014 on 01/2015) then used my bonus in 04/2015 for FY2015.

Now I do 2. I maxed out FY2017 early January and I just started building up for FY2018 in my savings account.


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