Are you guys still maxing Roth IRA in January?

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GMCZ71
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Re: Are you guys still maxing Roth IRA in January?

Post by GMCZ71 »

thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
Do you have the money to do it in January?
If you do whats it doing? checking, money market, index?
Is the $6-7k a small % or large % of your total portfolio?
If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January. :happy
John | * Friends and family and money | * What you recommend will have periods of underperformance. You will be blamed. | * You avoid the suspicion of "self-serving." by Taylor Larimore
iamfinethanku
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Re: Are you guys still maxing Roth IRA in January?

Post by iamfinethanku »

I've been maxing backdoor Roth every September for few years, but it seems that many people do this in January - is there any advantage doing this earlier year than mid-year?
async
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Re: Are you guys still maxing Roth IRA in January?

Post by async »

firebirdparts wrote: Sat Jan 07, 2023 12:15 pm I'm a little concerned about making too much money and then having to reel it back in. Market timing, though, not a temptation at all. well, okay it is a temptation, but I'm temped to buy immediately which isn't what was asked.
Why not just always backdoor and avoid the issue?
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Re: Are you guys still maxing Roth IRA in January?

Post by jand87 »

I like to lump sum it but it takes me a few months to save up. I usually do it in March.
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Re: Are you guys still maxing Roth IRA in January?

Post by Johm221122 »

thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
Yes, the market historically goes up.
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Re: Are you guys still maxing Roth IRA in January?

Post by Johm221122 »

GMCZ71 wrote: Sat Jan 21, 2023 7:53 am
thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
Do you have the money to do it in January?
If you do whats it doing? checking, money market, index?
Is the $6-7k a small % or large % of your total portfolio?
If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January. :happy
Historically lump sum beats DCA(or periodically) investing. I believe Vanguard says 70% of time
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Re: Are you guys still maxing Roth IRA in January?

Post by cshell2 »

thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
Investing every January is still DCA, it's just annual instead of monthly or weekly or whatever you're doing.

This is the first year I haven't maxed my IRA in January for a lot of years, but it's because I don't have the funds to do so otherwise I would.
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Re: Are you guys still maxing Roth IRA in January?

Post by Metsfan91 »

achen9291 wrote: Tue Jan 03, 2023 7:10 pm Normally I have maxed the Roth in January every year... but for 2023 for some reason I feel like waiting due to recent events.. although I have the money now to invest but I also bought some land that I want to pay off too.. I have about $17k left to pay and the interest rate is 6.5%... not sure what I should prioritize..
I don't. I don't have the money. I buy as I earn. If there is anything extra remaining after maxing out, it goes to taxable. I do not exchange taxable for Roth IRA. Never thought about it.
"Know what you own, and know why you own it." — Peter Lynch
WhiteMaxima
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Re: Are you guys still maxing Roth IRA in January?

Post by WhiteMaxima »

I filled pre-tax 401k 1st and do aft-tax 401k (mega back roth rollover right away) till IRS limit (66000 I believe) the n contibute 50% of my pre-tax income do company non-qualified pre-tax retirement.
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Re: Are you guys still maxing Roth IRA in January?

Post by egri »

I max out in January. In between contributions going into my TSP and taxable brokerage every two weeks, I figure I have the rest of the year covered.
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Re: Are you guys still maxing Roth IRA in January?

Post by thedaybeforetoday »

Johm221122 wrote: Sat Jan 21, 2023 10:47 pm
GMCZ71 wrote: Sat Jan 21, 2023 7:53 am
thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
Do you have the money to do it in January?
If you do whats it doing? checking, money market, index?
Is the $6-7k a small % or large % of your total portfolio?
If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January. :happy
Historically lump sum beats DCA(or periodically) investing. I believe Vanguard says 70% of time
Yes if your 100% stocks that's historically true.
But what if your not 100% stocks? What's the research say about lump sum vs DCA for say 60/40 or 60/20/20?
Responses have me genuinely curious but would like to see research prior to changing my behavior.
Thanks
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
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GMCZ71
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Re: Are you guys still maxing Roth IRA in January?

Post by GMCZ71 »

Metsfan91 wrote: Sat Jan 21, 2023 11:02 pm
achen9291 wrote: Tue Jan 03, 2023 7:10 pm Normally I have maxed the Roth in January every year... but for 2023 for some reason I feel like waiting due to recent events.. although I have the money now to invest but I also bought some land that I want to pay off too.. I have about $17k left to pay and the interest rate is 6.5%... not sure what I should prioritize..
I don't. I don't have the money. I buy as I earn. If there is anything extra remaining after maxing out, it goes to taxable. I do not exchange taxable for Roth IRA. Never thought about it.
Hopefully your taxable is a tax partner for your Roth and other accounts. We use vtsax in Roth and tax deferred. SP500 or large cap in taxable dividends not reinvested. Exchange in January to Roth might have gain or tax loss. Last Jan 2022 market was higher, but tax loss harvested the taxable around June and again in November.
John | * Friends and family and money | * What you recommend will have periods of underperformance. You will be blamed. | * You avoid the suspicion of "self-serving." by Taylor Larimore
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Re: Are you guys still maxing Roth IRA in January?

Post by GMCZ71 »

thedaybeforetoday wrote: Sun Jan 22, 2023 5:55 am
Johm221122 wrote: Sat Jan 21, 2023 10:47 pm
GMCZ71 wrote: Sat Jan 21, 2023 7:53 am
thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am advantage to maxing out in January?
Do you have the money to do it in January?
If you do whats it doing? checking, money market, index?
Is the $6-7k a small % or large % of your total portfolio?
If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January. :happy
Historically lump sum beats DCA(or periodically) investing. I believe Vanguard says 70% of time
Yes if your 100% stocks that's historically true.
But what if your not 100% stocks? What's the research say about lump sum vs DCA for say 60/40 or 60/20/20?
Responses have me genuinely curious but would like to see research prior to changing my behavior.
Thanks
Lets say $100k portfolio split between taxable- tax def and Roth
$60k stock
$40k bond
In January you move $6k from checking to Roth. Same day or week you need to adjust tax deferred so you stay at your 60/40.
Instead January you exchange $6k of stock in taxable to Roth (creates a gain or loss) your AA stays the same.

After the January purchase:
If the market goes up you need to rebalance.
If market goes down you need to rebalance. And tax loss harvest.
Either case you get some dca somewhere in your portfolio.
John | * Friends and family and money | * What you recommend will have periods of underperformance. You will be blamed. | * You avoid the suspicion of "self-serving." by Taylor Larimore
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Re: Are you guys still maxing Roth IRA in January?

Post by Johm221122 »

thedaybeforetoday wrote: Sun Jan 22, 2023 5:55 am
Johm221122 wrote: Sat Jan 21, 2023 10:47 pm
GMCZ71 wrote: Sat Jan 21, 2023 7:53 am
thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
Do you have the money to do it in January?
If you do whats it doing? checking, money market, index?
Is the $6-7k a small % or large % of your total portfolio?
If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January. :happy
Historically lump sum beats DCA(or periodically) investing. I believe Vanguard says 70% of time
Yes if your 100% stocks that's historically true.
But what if your not 100% stocks? What's the research say about lump sum vs DCA for say 60/40 or 60/20/20?
Responses have me genuinely curious but would like to see research prior to changing my behavior.
Thanks
I don't think bonds would change the outcome because both stocks and bonds historically go up. How many times have bonds had a negative year?
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Re: Are you guys still maxing Roth IRA in January?

Post by grabiner »

thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
The advantage of maxing in January does not depend on dollar cost averaging. You can have the same money in the same investments inside or outside the Roth IRA, and it's better to have the money inside the Roth IRA so that gains are not taxed.

If you invest new money as you have it available for investing, then you are naturally dollar-cost averaging. But you are still better off maxing out the Roth IRA first, and then investing new money into stocks in your taxable account once the Roth IRA is maxed out. (If you also have a 401(k), you probably want to contribute from every paycheck.)
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Re: Are you guys still maxing Roth IRA in January?

Post by thedaybeforetoday »

GMCZ71 wrote: Sun Jan 22, 2023 7:32 am
thedaybeforetoday wrote: Sun Jan 22, 2023 5:55 am
Johm221122 wrote: Sat Jan 21, 2023 10:47 pm
GMCZ71 wrote: Sat Jan 21, 2023 7:53 am
thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am advantage to maxing out in January?
Do you have the money to do it in January?
If you do whats it doing? checking, money market, index?
Is the $6-7k a small % or large % of your total portfolio?
If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January. :happy
Historically lump sum beats DCA(or periodically) investing. I believe Vanguard says 70% of time
Yes if your 100% stocks that's historically true.
But what if your not 100% stocks? What's the research say about lump sum vs DCA for say 60/40 or 60/20/20?
Responses have me genuinely curious but would like to see research prior to changing my behavior.
Thanks
Lets say $100k portfolio split between taxable- tax def and Roth
$60k stock
$40k bond
In January you move $6k from checking to Roth. Same day or week you need to adjust tax deferred so you stay at your 60/40.
Instead January you exchange $6k of stock in taxable to Roth (creates a gain or loss) your AA stays the same.

After the January purchase:
If the market goes up you need to rebalance.
If market goes down you need to rebalance.
And tax loss harvest.
Either case you get some dca somewhere in your portfolio.
The market goes up or down daily, so with what frequency are you rebalancing under your method?
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
JDave
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Re: Are you guys still maxing Roth IRA in January?

Post by JDave »

There are always a dozen perfectly valid reason why the market will go down, and there are always a dozen perfectly valid reasons why the market will go up.
Over time, the market has always gone up.
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Re: Are you guys still maxing Roth IRA in January?

Post by Metsfan91 »

GMCZ71 wrote: Sun Jan 22, 2023 7:02 am
Metsfan91 wrote: Sat Jan 21, 2023 11:02 pm
achen9291 wrote: Tue Jan 03, 2023 7:10 pm Normally I have maxed the Roth in January every year... but for 2023 for some reason I feel like waiting due to recent events.. although I have the money now to invest but I also bought some land that I want to pay off too.. I have about $17k left to pay and the interest rate is 6.5%... not sure what I should prioritize..
I don't. I don't have the money. I buy as I earn. If there is anything extra remaining after maxing out, it goes to taxable. I do not exchange taxable for Roth IRA. Never thought about it.
Hopefully your taxable is a tax partner for your Roth and other accounts. We use vtsax in Roth and tax deferred. SP500 or large cap in taxable dividends not reinvested. Exchange in January to Roth might have gain or tax loss. Last Jan 2022 market was higher, but tax loss harvested the taxable around June and again in November.
I have vanguard healthcare fund and Wellington fund in taxable. I added these a while ago. I stopped adding new money to these some years ago. I also have Vanguard total US stock index fund and total international stock index fund in taxable. New money goes to these funds...I don't have any of these funds in Roth.
"Know what you own, and know why you own it." — Peter Lynch
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Re: Are you guys still maxing Roth IRA in January?

Post by Indexboss »

I do a lump sum first business day of the market being open every January. I don't pay attention to the market.

I remember an article that Vanguard published saying that lump sum inventing beats DCA overall. I can't find it right now.
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Re: Are you guys still maxing Roth IRA in January?

Post by GMCZ71 »

thedaybeforetoday wrote: Sun Jan 22, 2023 11:16 am
GMCZ71 wrote: Sun Jan 22, 2023 7:32 am
thedaybeforetoday wrote: Sun Jan 22, 2023 5:55 am
Johm221122 wrote: Sat Jan 21, 2023 10:47 pm
GMCZ71 wrote: Sat Jan 21, 2023 7:53 am
Do you have the money to do it in January?

If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January. :happy
Historically lump sum beats DCA(or periodically) investing. I believe Vanguard says 70% of time
but would like to see research prior to changing my behavior.
Thanks
Lets say $100k portfolio split between taxable- tax def and Roth
$60k stock
$40k bond
In January you move $6k from checking to Roth. Same day or week you need to adjust tax deferred so you stay at your 60/40.
Instead January you exchange $6k of stock in taxable to Roth (creates a gain or loss) your AA stays the same.

After the January purchase:
If the market goes up you need to rebalance.
If market goes down you need to rebalance.
And tax loss harvest.
Either case you get some dca somewhere in your portfolio.
The market goes up or down daily, so with what frequency are you rebalancing under your method?
5% bands so the market needs to move quite a bit to change your 60/40.

From wiki https://www.bogleheads.org/wiki/Rebalancing
Normal market fluctuations do not frequently trigger rebalancing.
Shifting the balance of a 50/50 portfolio by 1% requires a 4% change in the price of stocks relative to bonds. All other portfolios are less sensitive, with 70/30 or 30/70 requiring a 5% change, 80/20 or 20/80 a 6% change, and 90/10 or 10/90 an 11% change. For example, a $10,000 60/40 portfolio will, after a 10% stock market drop, have $6,000 * 0.9 = $5,400 in stocks and $4,000 in bonds, for a stock allocation of $5,400 / ($5,400 + $4,000) = 57.45%, a 2.55% shift.
John | * Friends and family and money | * What you recommend will have periods of underperformance. You will be blamed. | * You avoid the suspicion of "self-serving." by Taylor Larimore
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Re: Are you guys still maxing Roth IRA in January?

Post by thedaybeforetoday »

Indexboss wrote: Sun Jan 22, 2023 7:15 pm I do a lump sum first business day of the market being open every January. I don't pay attention to the market.

I remember an article that Vanguard published saying that lump sum inventing beats DCA overall. I can't find it right now.
Yes, true, 70% of the time for 100% equities, but what if your not 100% equities?
What percent of the time does lump sum beat DCA if your 60/40 or 60/20/20 as I am?
I suspect it's less than 70% of the time that lump sum beats DCA if one is 60/20/20. If it's closer to 50% of the time then things get murkier.
I've asked up thread but no one responded.
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
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Re: Are you guys still maxing Roth IRA in January?

Post by Johm221122 »

thedaybeforetoday wrote: Mon Jan 23, 2023 11:06 am
Indexboss wrote: Sun Jan 22, 2023 7:15 pm I do a lump sum first business day of the market being open every January. I don't pay attention to the market.

I remember an article that Vanguard published saying that lump sum inventing beats DCA overall. I can't find it right now.
Yes, true, 70% of the time for 100% equities, but what if your not 100% equities?
What percent of the time does lump sum beat DCA if your 60/40 or 60/20/20 as I am?
I suspect it's less than 70% of the time that lump sum beats DCA if one is 60/20/20. If it's closer to 50% of the time then things get murkier.
I've asked up thread but no one responded.
Nobody probably has that data readily available.
But why would a portfolio diversified with bonds and cash rise less often? Bonds and cash would probably make it higher return by using lump sum instead of DCA, because they're safer investments they tend to drop in value less often.
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Re: Are you guys still maxing Roth IRA in January?

Post by thedaybeforetoday »

Johm221122 wrote: Mon Jan 23, 2023 11:38 am
thedaybeforetoday wrote: Mon Jan 23, 2023 11:06 am
Indexboss wrote: Sun Jan 22, 2023 7:15 pm I do a lump sum first business day of the market being open every January. I don't pay attention to the market.

I remember an article that Vanguard published saying that lump sum inventing beats DCA overall. I can't find it right now.
Yes, true, 70% of the time for 100% equities, but what if your not 100% equities?
What percent of the time does lump sum beat DCA if your 60/40 or 60/20/20 as I am?
I suspect it's less than 70% of the time that lump sum beats DCA if one is 60/20/20. If it's closer to 50% of the time then things get murkier.
I've asked up thread but no one responded.
Nobody probably has that data readily available.
But why would a portfolio diversified with bonds and cash rise less often? Bonds and cash would probably make it higher return by using lump sum instead of DCA, because they're safer investments they tend to drop in value less often.
I can make a case equally convincing the other way which is why I'm interested in data.

Not sure why data showing lump sum 60/40 isn't available if we can easily find that 70% of the time 100% equities beats DCA, per vanguard.
Since more folks are closer to 60/40 than 100% equities I would think data around 60/40 would be more useful to more investors.
I can think of why a mutual fund company, upon realizing that 60/40 data is more of a coin toss when it comes to lump sum vs DCA, wouldn't make that data 60/40 as readily available as they have the 100% number, since that 70% success rate might be more to the company's benefit. :happy

Esp since I found this:
"When the markets are trending down, dollar-cost averaging may perform better. Vanguard’s study found that, in lump-sum investing, the 10-year return was negative 22.4% of the time. In the dollar-cost averaging scenarios for the corresponding time periods, the return was negative only 17.6% of the time." https://sifterfund.com/en/lump-sum-inve ... the%20time.

Either way, not sure DCA vs lump sum results in any major differences in return, so absent data, I'm just going to carry on...
YMMV
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
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Re: Are you guys still maxing Roth IRA in January?

Post by Johm221122 »

thedaybeforetoday wrote: Mon Jan 23, 2023 12:20 pm
Johm221122 wrote: Mon Jan 23, 2023 11:38 am
thedaybeforetoday wrote: Mon Jan 23, 2023 11:06 am
Indexboss wrote: Sun Jan 22, 2023 7:15 pm I do a lump sum first business day of the market being open every January. I don't pay attention to the market.

I remember an article that Vanguard published saying that lump sum inventing beats DCA overall. I can't find it right now.
Yes, true, 70% of the time for 100% equities, but what if your not 100% equities?
What percent of the time does lump sum beat DCA if your 60/40 or 60/20/20 as I am?
I suspect it's less than 70% of the time that lump sum beats DCA if one is 60/20/20. If it's closer to 50% of the time then things get murkier.
I've asked up thread but no one responded.
Nobody probably has that data readily available.
But why would a portfolio diversified with bonds and cash rise less often? Bonds and cash would probably make it higher return by using lump sum instead of DCA, because they're safer investments they tend to drop in value less often.
I can make a case equally convincing the other way which is why I'm interested in data.

Not sure why data showing lump sum 60/40 isn't available if we can easily find that 70% of the time 100% equities beats DCA, per vanguard.
Since more folks are closer to 60/40 than 100% equities I would think data around 60/40 would be more useful to more investors.
I can think of why a mutual fund company, upon realizing that 60/40 data is more of a coin toss when it comes to lump sum vs DCA, wouldn't make that data 60/40 as readily available as they have the 100% number, since that 70% success rate might be more to the company's benefit. :happy

Esp since I found this:
"When the markets are trending down, dollar-cost averaging may perform better. Vanguard’s study found that, in lump-sum investing, the 10-year return was negative 22.4% of the time. In the dollar-cost averaging scenarios for the corresponding time periods, the return was negative only 17.6% of the time." https://sifterfund.com/en/lump-sum-inve ... the%20time.

Either way, not sure DCA vs lump sum results in any major differences in return, so absent data, I'm just going to carry on...
YMMV
This is the key takeaway from your link in my opinion
While dollar-cost averaging has not necessarily been the most optimal strategy in light of the historical data, it is still significantly better than not investing at all.
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Re: Are you guys still maxing Roth IRA in January?

Post by Hyperchicken »

Maybe I'm just being petty, but whenever I see "most optimal", I stop reading.
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Re: Are you guys still maxing Roth IRA in January?

Post by thedaybeforetoday »

Johm221122 wrote: Mon Jan 23, 2023 1:09 pm
thedaybeforetoday wrote: Mon Jan 23, 2023 12:20 pm
Johm221122 wrote: Mon Jan 23, 2023 11:38 am
thedaybeforetoday wrote: Mon Jan 23, 2023 11:06 am
Indexboss wrote: Sun Jan 22, 2023 7:15 pm I do a lump sum first business day of the market being open every January. I don't pay attention to the market.

I remember an article that Vanguard published saying that lump sum inventing beats DCA overall. I can't find it right now.
Yes, true, 70% of the time for 100% equities, but what if your not 100% equities?
What percent of the time does lump sum beat DCA if your 60/40 or 60/20/20 as I am?
I suspect it's less than 70% of the time that lump sum beats DCA if one is 60/20/20. If it's closer to 50% of the time then things get murkier.
I've asked up thread but no one responded.
Nobody probably has that data readily available.
But why would a portfolio diversified with bonds and cash rise less often? Bonds and cash would probably make it higher return by using lump sum instead of DCA, because they're safer investments they tend to drop in value less often.
I can make a case equally convincing the other way which is why I'm interested in data.

Not sure why data showing lump sum 60/40 isn't available if we can easily find that 70% of the time 100% equities beats DCA, per vanguard.
Since more folks are closer to 60/40 than 100% equities I would think data around 60/40 would be more useful to more investors.
I can think of why a mutual fund company, upon realizing that 60/40 data is more of a coin toss when it comes to lump sum vs DCA, wouldn't make that data 60/40 as readily available as they have the 100% number, since that 70% success rate might be more to the company's benefit. :happy

Esp since I found this:
"When the markets are trending down, dollar-cost averaging may perform better. Vanguard’s study found that, in lump-sum investing, the 10-year return was negative 22.4% of the time. In the dollar-cost averaging scenarios for the corresponding time periods, the return was negative only 17.6% of the time." https://sifterfund.com/en/lump-sum-inve ... the%20time.

Either way, not sure DCA vs lump sum results in any major differences in return, so absent data, I'm just going to carry on...
YMMV
This is the key takeaway from your link in my opinion
While dollar-cost averaging has not necessarily been the most optimal strategy in light of the historical data, it is still significantly better than not investing at all.
OK: everyone like to cherry pick to fit their narrative.
Can be more difficult to do that with actual numbers.
I'll be waiting for the data on the lump sum 60/40 investing.
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
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Re: Are you guys still maxing Roth IRA in January?

Post by Johm221122 »

thedaybeforetoday wrote: Mon Jan 23, 2023 3:43 pm
Johm221122 wrote: Mon Jan 23, 2023 1:09 pm
thedaybeforetoday wrote: Mon Jan 23, 2023 12:20 pm
Johm221122 wrote: Mon Jan 23, 2023 11:38 am
thedaybeforetoday wrote: Mon Jan 23, 2023 11:06 am

Yes, true, 70% of the time for 100% equities, but what if your not 100% equities?
What percent of the time does lump sum beat DCA if your 60/40 or 60/20/20 as I am?
I suspect it's less than 70% of the time that lump sum beats DCA if one is 60/20/20. If it's closer to 50% of the time then things get murkier.
I've asked up thread but no one responded.
Nobody probably has that data readily available.
But why would a portfolio diversified with bonds and cash rise less often? Bonds and cash would probably make it higher return by using lump sum instead of DCA, because they're safer investments they tend to drop in value less often.
I can make a case equally convincing the other way which is why I'm interested in data.

Not sure why data showing lump sum 60/40 isn't available if we can easily find that 70% of the time 100% equities beats DCA, per vanguard.
Since more folks are closer to 60/40 than 100% equities I would think data around 60/40 would be more useful to more investors.
I can think of why a mutual fund company, upon realizing that 60/40 data is more of a coin toss when it comes to lump sum vs DCA, wouldn't make that data 60/40 as readily available as they have the 100% number, since that 70% success rate might be more to the company's benefit. :happy

Esp since I found this:
"When the markets are trending down, dollar-cost averaging may perform better. Vanguard’s study found that, in lump-sum investing, the 10-year return was negative 22.4% of the time. In the dollar-cost averaging scenarios for the corresponding time periods, the return was negative only 17.6% of the time." https://sifterfund.com/en/lump-sum-inve ... the%20time.

Either way, not sure DCA vs lump sum results in any major differences in return, so absent data, I'm just going to carry on...
YMMV
This is the key takeaway from your link in my opinion
While dollar-cost averaging has not necessarily been the most optimal strategy in light of the historical data, it is still significantly better than not investing at all.
OK: everyone like to cherry pick to fit their narrative.
Can be more difficult to do that with actual numbers.
I'll be waiting for the data on the lump sum 60/40 investing.
Not only us but the author of your link


The strategy chosen by the Sifter Fund is to be 100% invested in the stock market in all market conditions.
This means they don't DCA
OatmealAddict
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Re: Are you guys still maxing Roth IRA in January?

Post by OatmealAddict »

Nope. That would require me pulling $13k out of our emergency savings.

Instead, I put excess cash flow aside for a few months and do the two backdoor Roths when I have the funds to do so.

It'll probably be the middle of the year before I have the funds this year.
thedaybeforetoday
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Re: Are you guys still maxing Roth IRA in January?

Post by thedaybeforetoday »

Johm221122 wrote: Mon Jan 23, 2023 7:01 pm
thedaybeforetoday wrote: Mon Jan 23, 2023 3:43 pm
Johm221122 wrote: Mon Jan 23, 2023 1:09 pm
thedaybeforetoday wrote: Mon Jan 23, 2023 12:20 pm
Johm221122 wrote: Mon Jan 23, 2023 11:38 am
Nobody probably has that data readily available.
But why would a portfolio diversified with bonds and cash rise less often? Bonds and cash would probably make it higher return by using lump sum instead of DCA, because they're safer investments they tend to drop in value less often.
I can make a case equally convincing the other way which is why I'm interested in data.

Not sure why data showing lump sum 60/40 isn't available if we can easily find that 70% of the time 100% equities beats DCA, per vanguard.
Since more folks are closer to 60/40 than 100% equities I would think data around 60/40 would be more useful to more investors.
I can think of why a mutual fund company, upon realizing that 60/40 data is more of a coin toss when it comes to lump sum vs DCA, wouldn't make that data 60/40 as readily available as they have the 100% number, since that 70% success rate might be more to the company's benefit. :happy

Esp since I found this:
"When the markets are trending down, dollar-cost averaging may perform better. Vanguard’s study found that, in lump-sum investing, the 10-year return was negative 22.4% of the time. In the dollar-cost averaging scenarios for the corresponding time periods, the return was negative only 17.6% of the time." https://sifterfund.com/en/lump-sum-inve ... the%20time.

Either way, not sure DCA vs lump sum results in any major differences in return, so absent data, I'm just going to carry on...
YMMV
This is the key takeaway from your link in my opinion
While dollar-cost averaging has not necessarily been the most optimal strategy in light of the historical data, it is still significantly better than not investing at all.
OK: everyone like to cherry pick to fit their narrative.
Can be more difficult to do that with actual numbers.
I'll be waiting for the data on the lump sum 60/40 investing.
Not only us but the author of your link


The strategy chosen by the Sifter Fund is to be 100% invested in the stock market in all market conditions.
This means they don't DCA
DCA has nothing to do with asset mix
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
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Re: Are you guys still maxing Roth IRA in January?

Post by thedaybeforetoday »

GMCZ71 wrote: Sat Jan 21, 2023 7:53 am
thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
Do you have the money to do it in January?
If you do whats it doing? checking, money market, index?
Is the $6-7k a small % or large % of your total portfolio?
If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January
. :happy
Are those amounts chosen by you or based on some research you've read?
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Re: Are you guys still maxing Roth IRA in January?

Post by GMCZ71 »

thedaybeforetoday wrote: Tue Jan 24, 2023 4:39 am
GMCZ71 wrote: Sat Jan 21, 2023 7:53 am
thedaybeforetoday wrote: Sat Jan 21, 2023 5:43 am Never have maxed out a Roth IRA in January, never will.
I dollar cost average over the course of a year for all investments.
Is there an advantage to maxing out in January?
Do you have the money to do it in January?
If you do whats it doing? checking, money market, index?
Is the $6-7k a small % or large % of your total portfolio?
If you only have $50k total in all accounts then dca.
If your $700k or higher its just noise put it in January
. :happy
Are those amounts chosen by you or based on some research you've read?
I just used those for an example to show the math. If the January lump sum of $6k is 10% of all your money that is hard for someone to lump sum. On the other hand if the $6k is 1% then the lump sum is noise. Your AA is within your bands. Time in the market wins not timing the market.
John | * Friends and family and money | * What you recommend will have periods of underperformance. You will be blamed. | * You avoid the suspicion of "self-serving." by Taylor Larimore
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Re: Are you guys still maxing Roth IRA in January?

Post by chazas »

Always. I get a big chunk of my comp in late December and early January so I fund my back door Roth, HSA, and Ibond purchases in early January.
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Re: Are you guys still maxing Roth IRA in January?

Post by Johm221122 »

thedaybeforetoday wrote: Tue Jan 24, 2023 4:37 am
Johm221122 wrote: Mon Jan 23, 2023 7:01 pm
thedaybeforetoday wrote: Mon Jan 23, 2023 3:43 pm
Johm221122 wrote: Mon Jan 23, 2023 1:09 pm
thedaybeforetoday wrote: Mon Jan 23, 2023 12:20 pm

I can make a case equally convincing the other way which is why I'm interested in data.

Not sure why data showing lump sum 60/40 isn't available if we can easily find that 70% of the time 100% equities beats DCA, per vanguard.
Since more folks are closer to 60/40 than 100% equities I would think data around 60/40 would be more useful to more investors.
I can think of why a mutual fund company, upon realizing that 60/40 data is more of a coin toss when it comes to lump sum vs DCA, wouldn't make that data 60/40 as readily available as they have the 100% number, since that 70% success rate might be more to the company's benefit. :happy

Esp since I found this:
"When the markets are trending down, dollar-cost averaging may perform better. Vanguard’s study found that, in lump-sum investing, the 10-year return was negative 22.4% of the time. In the dollar-cost averaging scenarios for the corresponding time periods, the return was negative only 17.6% of the time." https://sifterfund.com/en/lump-sum-inve ... the%20time.

Either way, not sure DCA vs lump sum results in any major differences in return, so absent data, I'm just going to carry on...
YMMV
This is the key takeaway from your link in my opinion
While dollar-cost averaging has not necessarily been the most optimal strategy in light of the historical data, it is still significantly better than not investing at all.
OK: everyone like to cherry pick to fit their narrative.
Can be more difficult to do that with actual numbers.
I'll be waiting for the data on the lump sum 60/40 investing.
Not only us but the author of your link


The strategy chosen by the Sifter Fund is to be 100% invested in the stock market in all market conditions.
This means they don't DCA
DCA has nothing to do with asset mix
I agree but this quote means they are both 100% invested and 100% stocks
I was referring to the 100% invested aspect, you of course should be 100% invested in your choice of asset allocation model
Booper
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Re: Are you guys still maxing Roth IRA in January?

Post by Booper »

achen9291 wrote: Tue Jan 03, 2023 7:10 pm Normally I have maxed the Roth in January every year... but for 2023 for some reason I feel like waiting due to recent events.. although I have the money now to invest but I also bought some land that I want to pay off too.. I have about $17k left to pay and the interest rate is 6.5%... not sure what I should prioritize..
I did my first backdoor Roth last year.

I was surprised that the advice was to do it as a lump sum in January. But as I had the money, and was new to the process, I did that.

This year I realized that you can do as many Roth conversions in a year as you want. So I am doing it on a monthly basis. I set up a monthly contribution to my IRA, and made a note to do the conversion once a month.

One day I might go back to doing it in a lump sum. But now I find that I like having a monthly budget. And this helps with that.
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Re: Are you guys still maxing Roth IRA in January?

Post by OatmealAddict »

Booper wrote: Tue Jan 24, 2023 12:43 pm
achen9291 wrote: Tue Jan 03, 2023 7:10 pm Normally I have maxed the Roth in January every year... but for 2023 for some reason I feel like waiting due to recent events.. although I have the money now to invest but I also bought some land that I want to pay off too.. I have about $17k left to pay and the interest rate is 6.5%... not sure what I should prioritize..
I did my first backdoor Roth last year.

I was surprised that the advice was to do it as a lump sum in January. But as I had the money, and was new to the process, I did that.

This year I realized that you can do as many Roth conversions in a year as you want. So I am doing it on a monthly basis. I set up a monthly contribution to my IRA, and made a note to do the conversion once a month.

One day I might go back to doing it in a lump sum. But now I find that I like having a monthly budget. And this helps with that.
Hmmm. I didn't realize that was a possibility. Does it become more complicated from a tax reporting standpoint? The monthly contribution and conversion route would suit me better as well as long as it's not a tax reporting nightmare. We max two backdoor Roths every year (but have always waited until we've saved enough to do each).
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Re: Are you guys still maxing Roth IRA in January?

Post by Booper »

JimmyD wrote: Tue Jan 24, 2023 12:58 pm
Booper wrote: Tue Jan 24, 2023 12:43 pm
achen9291 wrote: Tue Jan 03, 2023 7:10 pm Normally I have maxed the Roth in January every year... but for 2023 for some reason I feel like waiting due to recent events.. although I have the money now to invest but I also bought some land that I want to pay off too.. I have about $17k left to pay and the interest rate is 6.5%... not sure what I should prioritize..
I did my first backdoor Roth last year.

I was surprised that the advice was to do it as a lump sum in January. But as I had the money, and was new to the process, I did that.

This year I realized that you can do as many Roth conversions in a year as you want. So I am doing it on a monthly basis. I set up a monthly contribution to my IRA, and made a note to do the conversion once a month.

One day I might go back to doing it in a lump sum. But now I find that I like having a monthly budget. And this helps with that.
Hmmm. I didn't realize that was a possibility. Does it become more complicated from a tax reporting standpoint? The monthly contribution and conversion route would suit me better as well as long as it's not a tax reporting nightmare. We max two backdoor Roths every year (but have always waited until we've saved enough to do each).
It has no impact on tax reporting. When questions like this come up, people normally refer you to Form 8606. I never read it carefully myself, but I think it concerns itself with things like "ending balances on 12/31". So the amount of activity throughout the year is irrelevant for tax purposes.
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Re: Are you guys still maxing Roth IRA in January?

Post by White Coat Investor »

achen9291 wrote: Tue Jan 03, 2023 7:10 pm Normally I have maxed the Roth in January every year... but for 2023 for some reason I feel like waiting due to recent events.. although I have the money now to invest but I also bought some land that I want to pay off too.. I have about $17k left to pay and the interest rate is 6.5%... not sure what I should prioritize..
You have to decide what is best for you, but I see little reason to invest in a taxable account before I max out my tax protected accounts. In the beginning it took me all year to max out a Roth IRA. Then slowly I moved it up until it got to January. Then I started doing the same with HSAs, 401(k)s, UTMAs, 529s etc. Now I max most of them out in January and then just invest in taxable the rest of the year.

But if I had a 6.5% guaranteed return available to me, I'd probably max that out before making any retirement account contributions.
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Re: Are you guys still maxing Roth IRA in January?

Post by heyyou »

If you invest fully, as early as possible every year, long term you get almost an extra year of returns more than those who wait until December of every year.

That matters after 20+ years of doing it the better way. Note how the difference in time of the two choices is on consecutive months. December for the laggard twin, and January for the math-wise Boglehead twin who can likely retire a year sooner, having started 11 months earlier every year.
Indexboss
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Re: Are you guys still maxing Roth IRA in January?

Post by Indexboss »

thedaybeforetoday wrote: Mon Jan 23, 2023 11:06 am
Indexboss wrote: Sun Jan 22, 2023 7:15 pm I do a lump sum first business day of the market being open every January. I don't pay attention to the market.

I remember an article that Vanguard published saying that lump sum inventing beats DCA overall. I can't find it right now.
Yes, true, 70% of the time for 100% equities, but what if your not 100% equities?
What percent of the time does lump sum beat DCA if your 60/40 or 60/20/20 as I am?
I suspect it's less than 70% of the time that lump sum beats DCA if one is 60/20/20. If it's closer to 50% of the time then things get murkier.
I've asked up thread but no one responded.
Valid point, at this point I am around 90% equities so it is still true for me generally. I also like the "it's done for the year" part.

In the end there probably is not a ton of difference.
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Re: Are you guys still maxing Roth IRA in January?

Post by TnGuy »

cshell2 wrote: Sat Jan 21, 2023 10:51 pmInvesting every January is still DCA, it's just annual instead of monthly or weekly or whatever you're doing.
That's been my thought and approach since Day 1 of my wife and my doing our ROTH IRA investing, staring many years back.


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