Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Lump Sum or Dollar Cost Averaging your Roth/IRA
Old 11-23-2006, 11:36 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,884
Lump Sum or Dollar Cost Averaging your Roth/IRA

Many folks here are currently contributing to a Roth or traditional IRA, as am I. I have always contributed to my Roth, as well as DW's Roth, on a DCA monthly (1/12th $5000) basis. I realize that a lump sum in January is probably a better way to handle it, however if I make the contribution in Jan @ $5000 X2 and I need the cash in June for some reason then I have a bit of a liquidity problem. I can postpone June's (July, Aug etc) contribution and add it in later in the year to make up the $5000. My point is that I realize that I am probably forgoing an eventually larger total in the future for a bit more liquidity and sleep time today.

Does anyone else look at it this way, or am I the Lone Ranger on this one?
__________________

__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Lump Sum or Dollar Cost Averaging your Roth/IRA
Old 11-23-2006, 12:47 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,627
Re: Lump Sum or Dollar Cost Averaging your Roth/IRA

Don't you have $CASH as part of your overall asset allocation? Say 5% or so sitting in a 5+% money market fund as an emergency fund. Is that not enough to overcome any liquidity problems?
__________________

__________________
LOL! is offline   Reply With Quote
Re: Lump Sum or Dollar Cost Averaging your Roth/IRA
Old 11-23-2006, 12:56 PM   #3
Full time employment: Posting here.
Patrick's Avatar
 
Join Date: Mar 2005
Location: Northern, Florida
Posts: 925
Re: Lump Sum or Dollar Cost Averaging your Roth/IRA

Quote:
Originally Posted by mickeyd
My point is that I realize that I am probably forgoing an eventually larger total in the future for a bit more liquidity and sleep time today.
Maybe not. You might be buying at lower values as the market fluctuates, which is the whole purpose of DCA. And, you might wind up with a larger total over time.
__________________
Retired in 2006 at age 49.

"Who among us is smart enough to learn from the mistakes of others?" - Voltaire
Patrick is offline   Reply With Quote
Re: Lump Sum or Dollar Cost Averaging your Roth/IRA
Old 11-23-2006, 04:38 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,617
Re: Lump Sum or Dollar Cost Averaging your Roth/IRA

I don't think you should sweat it. DCAing in on a monthly basis is a fine, no hassle way to get this done, and you might even end up ahead. If it really bothers you not to plop the whole thing into the IRA in Jan, could you afford to double-up the DCA for one year? Put the regular amount into your IRA each month just as you are now, and also put the same amount every month into a money market account. At the end of the year you'll have made your annual contributions for the year past, and in Jan have enough to plop into the IRA for the following year. Remember to turn off the DCA into your IRA or you'll be contributing too much.

The real bonus comes if you find you are comfortable saving the extra funds every month. Just keep adding the new, higher amount to a tax-efficient non-IRA account and build up your savings faster.

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Reply

Tags
ira


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Dollar cost averaging is... a lie? Sisyphus Young Dreamers 43 07-09-2007 05:15 PM
Lump sum or annuity runnerr FIRE and Money 17 07-01-2005 03:39 PM
Time to buy REITS? charlie FIRE and Money 63 04-20-2004 05:05 PM
Best place to park cash for 1-?? months cute fuzzy bunny FIRE and Money 61 01-04-2004 07:20 AM

 

 
All times are GMT -6. The time now is 11:02 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.