Systematic Purchase (Dollar Cost Averaging) Frequency?

[Dude]

I recently opened a Roth IRA at T. Rowe Price. I plan to dollar cost average into a fund over the next 30 or so years. I have the option of investing up to 4 days of the month. How often do you dollar cost average per month, and how did you come to that decision? Has there been any studies showing what frequency is best?

 

[Dude]

Just to clarify - say you had $400/month to invest, would you invest all $400 on one day (e.g. on the 1st of the month) or would you spread it out into more smaller investments (e.g. $100 on the 1st, 8th, 15th, 22nd)?



If investing bi-weekly, check "2 days a month". Thanks.

 

[haha]

Just to clarify - say you had $400/month to invest, would you invest all $400 on one day (e.g. on the 1st of the month) or would you spread it out into more smaller investments (e.g. $100 on the 1st, 8th, 15th, 22nd)?

Assuming that there are no transaction fees, and that this is to be a tax-deferred account, it wouldn't matter. For ease of use I would just do it at some pre-chosen point each month, rather than mess around with it. I believe that historically there is a slight tendency for Mondays to be weak, and for mid-month to be weak relative to the beginning and very end of a month. Try the third Monday of each month, and then forget about it. If Monday is a holiday with no trading, do Tuesday.

If you want to be sure these ideas are still valid, see Yale Hirsch, Stock Trader's Almanac.

Ha

 

[W2R]

I put that I DCA once a month, though like Ha I also think it probably doesn't matter a whole lot as long as there are no transaction fees and it is a tax-deferred account, and as long as you are DCA'ing regularly. The middle of the month works for me.

If I had $400 to invest, I would probably do it all on one day rather than on several days during the month. If I had $400 every month, I would invest that $400 once each month.

 

[Goonie]

I set my accounts up for one deposit per month. Some were set for the 1st week of the month, others for the 4th week. There was no real 'reason' for the dates that I chose, other than it was easy for me to remember what was going where, and when it was going there. It makes my bookkeeping easier......at least in my view.

 

[figner]

My only automated investment is my 401k, which is twice a month since that's when I get paid. Any other savings get lump summed in as soon as they reach a predetermined amount. Given the $400/month scenario, I'd just invest it asap - don't think it matters much either way.

 

[Alan]

My only automated investment is my 401k, which is twice a month since that's when I get paid. Any other savings get lump summed in as soon as they reach a predetermined amount. Given the $400/month scenario, I'd just invest it asap - don't think it matters much either way.

Same here. I put the max in evry 2 weeks including catch up contributions rather than stretch it out over the whole year. When I get my annual bonus in April I immediately max out my IRA as well.

 

[FIREd]

We get paid every two weeks so we add money biweekly to my wife's 401K and twice a month to our taxable account (on the 12th and 25th). We add money only once a month to my IRA (on the 10th).

 

[Spanky]

Just to clarify - say you had $400/month to invest, would you invest all $400 on one day (e.g. on the 1st of the month) or would you spread it out into more smaller investments (e.g. $100 on the 1st, 8th, 15th, 22nd)?



If investing bi-weekly, check "2 days a month". Thanks.

I vote for Investing all $400 on one day just to keep it simple.

 

[SecondCor521]

My 401(k) contributions are bi-weekly because that is my payroll schedule.

On everything else I lump sum in ASAP except in my taxable account where I wait until I have an even multiple of $1,000 that I can comfortably invest. That way I minimize the number of share lots I will have to deal with later.

2Cor521

 

[Dude]

Decided to KISS and do 1 day a month, on the 5th, along with my other automated payments. Thanks for helping me decide