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Convert or Save.. That is the question!
Old 10-24-2019, 05:21 PM   #1
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Convert or Save.. That is the question!

After typing all this out, i realize it's like a 6 part question, with some apparent market timing thinking in it.. I will apologize in advance!

I'm in my accumulation phase, being ~10 years from ER. I currently DCA with my bi-weekly Roth 401k contributions (to the max) AND bi-weekly purchases in my Taxable account.

My tIRA is about 2.5x's the size of my rIRA. I have been covering bit by bit over the past few years. My AA across the board is 98 equities/2 cash.

I will receive $6k in Child Tax Credit for 2019 - my withholdings don't account for the credit, so I anticipate that whole amount coming to me in Feb/Mar 2020 via my refund.

Knowing that we are "somewhere" "near" (maybe) the "top of the 'cycle'".. would you:

A) Discontinue the Taxable DCA, and pile up the cash (to include the $6k), until a time that the market is at a lower price than today.

B) Continue the Taxable DCA, and only hold the $6k until said future date.

C) Discontinue the Taxable DCA, and pile up the cash, until said future date. Use the $6k to cover taxes on a Roth Conversion - not to go above my current bracket.

D) Continue the Taxable DCA, and use the $6k to cover the taxes on a Roth Conversion - not to go above my current bracket.

E) Stay the course..
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Old 10-24-2019, 09:26 PM   #2
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My opinions:

Continue the Taxable DCA. I think market timing is a fool's errand.

Decide whether or not to do a Roth conversion (and of what magnitude) independently of whether or not you are getting a tax refund.

Figure out what your tax bill will be based on what Roth conversion you decided to do. Then go adjust your withholding so you get no refund and owe a small amount.

Adjust your taxable DCA up or down after your withholding has been adjusted.
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Old 10-25-2019, 06:38 AM   #3
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Quote:
Originally Posted by JoshTrent View Post
Knowing that we are "somewhere" "near" (maybe) the "top of the 'cycle'".. would you:

A) Discontinue the Taxable DCA, and pile up the cash (to include the $6k), until a time that the market is at a lower price than today.
How do you know we are at the top of a cycle?
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Old 10-25-2019, 08:04 AM   #4
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Agreed. They've been saying we're at the top of the cycle for years now. I'd continue with the DCA. That's the beauty of it. No stress, no market timing, regular investments.
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