Roth IRA question

[dynamitecat01]

Hi all-

I started my Roth IRA last year and am still learning about it. I have only contributed 1,500 for 2012 but would like to contribute the additional 3,500 by the April deadline to max out the year's contribution. Should I put the 3,500 into my target retirement fund and purchase shares in one lump sum or can I put it into a money market account and transfer it over to my target fund periodically, which seems safer instead?

[Wino]

You have only a month. There is no reason not to do it all in one lump sum.

[bUU]

I'm not sure if you're trying to do a dollar-cost averaging thing, with the "transfer it over to my target fund periodically" part of your plan, but if so, know that you can have more than one fund in your Roth IRA, and I suppose one could be a money market fund, and so I suppose you could put the money into a money market fund in your Roth IRA (before the deadline!) and then use that money to buy into the target date fund gradually, over the course of several months. Seems like a lot of work for not much value to me. It is intended to avoid making a large investment at a time when the share price is going to be falling, but if you knew that the share price is going to be falling then why wouldn't you just wait until the fall stopped and buy when the share price is going to be climbing? The reality is that we never really know which direction things are going in the short-term, so I just buy when I'm thinking about it, and rely on the fact that even if the share price is heading down now, it'll soon go back up, and presumably higher than what I'm buying-in at.

[kork13]

I love dollar-cost-averaging... I've done it since I first started investing about 7 years ago. However, it's generally only appropriate if you don't have the money upfront to invest all at one. My opinion is this: if you have a lump sum available, invest the lump sum & get invested so your money can start working for you. But if you want to invest a portion of our monthly income, then DCA all the way.