Fund Roth Today?

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Oak&Elm
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Fund Roth Today?

Post by Oak&Elm »

Not a market timer but todays dip does present an opportunity to fund my Roth and puchase my index funds 2% cheaper than yesterday. My only hesitation is I typically like to have earned the $7,000 limit first just in case I lose my job or something bad happens. Has anyone ever had to back funds out of a Roth? Got a feeling it's complicated.
Bigt3142
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Re: Fund Roth Today?

Post by Bigt3142 »

I'm not a market timer but I'm going to try to time this 2% drop.... Two questions: When do you think you're going to retire? Is the market going to be higher in the 20, 30, or 40 years until you do retire? This 2% drop won't even be a blip on the graph 20 years from now.

Backing it out is a process. If you don't think you're going to make enough then you might want to wait until you're sure.
exodusNH
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Re: Fund Roth Today?

Post by exodusNH »

Oak&Elm wrote: Mon Jan 10, 2022 10:51 am Not a market timer but todays dip does present an opportunity to fund my Roth and puchase my index funds 2% cheaper than yesterday. My only hesitation is I typically like to have earned the $7,000 limit first just in case I lose my job or something bad happens. Has anyone ever had to back funds out of a Roth? Got a feeling it's complicated.
You can fund your IRA in chunks. You don't need to do it as a single funding action.

BTW, today's "dip" is roughly where the market was at the beginning of December 2021.
Hyperchicken
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Re: Fund Roth Today?

Post by Hyperchicken »

I funded my 2021 Roth IRA on 12/30/2021, when I received my last paycheck and knew for sure where my annual income is at.

Bought VOO at 440.00 per share. Timed market top perfectly.
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Oak&Elm
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Re: Fund Roth Today?

Post by Oak&Elm »

Bigt3142 wrote: Mon Jan 10, 2022 10:58 am Backing it out is a process. If you don't think you're going to make enough then you might want to wait until you're sure.
That's kinda what I thought, I think I can fund a small chunk today and play it safe
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Oak&Elm
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Re: Fund Roth Today?

Post by Oak&Elm »

Bigt3142 wrote: Mon Jan 10, 2022 10:58 am I'm not a market timer but I'm going to try to time this 2% drop...
Do people really consider this market timing? I have the funds set aside waiting to be added once my income exceeded $7k for 2022. I'm fully aware the price of my index fund may be even lower or higher in a month, all I said was it is 2% cheaper today than yesterday. I think it's a quick win to take a little bite of the market today.
JD2775
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Re: Fund Roth Today?

Post by JD2775 »

Oak&Elm wrote: Mon Jan 10, 2022 11:26 am
Bigt3142 wrote: Mon Jan 10, 2022 10:58 am I'm not a market timer but I'm going to try to time this 2% drop...
Do people really consider this market timing? I have the funds set aside waiting to be added once my income exceeded $7k for 2022. I'm fully aware the price of my index fund may be even lower or higher in a month, all I said was it is 2% cheaper today than yesterday. I think it's a quick win to take a little bite of the market today.
How old are you OP? Given you are talking about a Roth, today's drop likely won't make any difference whatsoever years down the road when you actually need funds from this account. Contribute when you have the money.
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Oak&Elm
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Re: Fund Roth Today?

Post by Oak&Elm »

I'm 60 yo, my job situation is iffy or I would have plowed the 7K in on January 3rd, 1st day of trading in 2022
JD2775
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Re: Fund Roth Today?

Post by JD2775 »

Oak&Elm wrote: Mon Jan 10, 2022 11:32 am I'm 60 yo, my job situation is iffy or I would have plowed the 7K in on January 3rd, 1st day of trading in 2022
Gotcha. The job thing throws a wrench into the mix. Do whatever you feel comfortable doing, but I still wouldn't judge it based on the performance in the market on a particular day.
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Mullins
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Re: Fund Roth Today?

Post by Mullins »

Oak&Elm wrote: Mon Jan 10, 2022 11:26 am Do people really consider this market timing?
I'm sure someone does. The question is, should you care? Though there aren't any guarantees, odds are today's prices could be less than they will be by year's end, getting more shares of the appreciating kind into your Roth today. Any lower price event is fine to take advantage of. It may be called market timing but it could also be called being strategic.

But first, look at your particular holding, and estimate, if you can, how much it's price will have lowered from its high, and then determine if today is a good day to contribute to that holding.
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Oak&Elm
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Re: Fund Roth Today?

Post by Oak&Elm »

I'm sure someone does. The question is, should you care?
I'm plannning to purchase both the US and International TSM, pretty boring both currently down 1.5%, might not even be a dip by closing, buying the mutual fund version. I know people are being helpful by warning others of the folly of market timing but I don't think that is what I'm doing here.
Bigt3142
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Re: Fund Roth Today?

Post by Bigt3142 »

Oak&Elm wrote: Mon Jan 10, 2022 11:26 am
Bigt3142 wrote: Mon Jan 10, 2022 10:58 am I'm not a market timer but I'm going to try to time this 2% drop...
Do people really consider this market timing? I have the funds set aside waiting to be added once my income exceeded $7k for 2022. I'm fully aware the price of my index fund may be even lower or higher in a month, all I said was it is 2% cheaper today than yesterday. I think it's a quick win to take a little bite of the market today.
If I were in your shoes, I would wait and fund it until you're sure you'll make enough. It's market timing if you're waiting for a drop before fund it, but it doesn't sound like that is what you're doing.
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Re: Fund Roth Today?

Post by Oak&Elm »

If I were in your shoes, I would wait and fund it until you're sure you'll make enough.
Thanks, due to how my payroll works part of dec 2021 actually is added to 2022 so I have earned about $2,500 that can safely be invested today. This is actually the Boglehead way, time in the market vs market timing.
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Re: Fund Roth Today?

Post by arcticpineapplecorp. »

Oak&Elm wrote: Mon Jan 10, 2022 12:09 pm
If I were in your shoes, I would wait and fund it until you're sure you'll make enough.
Thanks, due to how my payroll works part of dec 2021 actually is added to 2022 so I have earned about $2,500 that can safely be invested today. This is actually the Boglehead way, time in the market vs market timing.
One other thing to remember is that leave payout counts towards earned income (perhaps unless you're able to put that in tax deferred in which case it might not show as income on line 1 of your w-2). But if leave is to be paid out (not deferred), you can calculate how much annual leave you have and if paid out if you leave/fired during the year how much would that be? If it's under $7000 than wait til you have earned enough that when added to this leave payout would have you showing $7000 or more this year on your w-2. Make sense?

ex: say you calculate your leave payout as $4500. You could contribute $7000 now to Roth because you've earned $2500 and would receive $4500 in leave payout if fired/quit ($2500 + $4500 = $7000).
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Mr.BB
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Re: Fund Roth Today?

Post by Mr.BB »

Oak&Elm wrote: Mon Jan 10, 2022 11:26 am
Bigt3142 wrote: Mon Jan 10, 2022 10:58 am I'm not a market timer but I'm going to try to time this 2% drop...
Do people really consider this market timing? I have the funds set aside waiting to be added once my income exceeded $7k for 2022. I'm fully aware the price of my index fund may be even lower or higher in a month, all I said was it is 2% cheaper today than yesterday. I think it's a quick win to take a little bite of the market today.
The problem is you never know what the market's going to do. I think it was 2019 I decided to put my money in throughout the year in my Roth. I would been much better off putting it in all at once. 2020 came along and I filled both accounts completely by mid-February. If I waited a few more weeks I would have had a 30% return on that initial money. You just don't know.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
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