DCA or Lump sum for maxing Roth

[cypher1]

A question just came to mind from another recent investment post. For those that max their Roth at the beginning of the year, do you either start investing the lump sum, or do DCA throughout the year?

In the past I usually did lump sum on my funds at the beginning of the year, but this year I'm looking more to spread them for DCA. I'm not expecting another big buying opportunity like last year, but want to be more consistent for scheduling purchases.

[Jluke]

Lump sum. It’s only 6k for me.

VBIAX balanced fund

[cypher1]

Lump sum. It’s only 6k for me.

VBIAX balanced fund

Yeah, I'm starting to think I should go back to my previous method for lump as well between VTSAX and VGHCX.

[corn18]

A question just came to mind from another recent investment post. For those that max their Roth at the beginning of the year, do you either start investing the lump sum, or do DCA throughout the year?

In the past I usually did lump sum on my funds at the beginning of the year, but this year I'm looking more to spread them for DCA. I'm not expecting another big buying opportunity like last year, but want to be more consistent for scheduling purchases.

Lump sum. Always lump sum.

[kork13]

If you have the cash available sitting around, lump sum. But if you don't have the cash readily available, DCA is fine. The thing is that you want to invest your cash when you have it available. Sooner is betterv of course, but there's nothing wrong with DCA -- it's still a great strategy.

Another time you might DCA in spite of cash on hand is if it's already obligated to other stuff (ex: we're planning some reno, so we're holding extra cash).

[cypher1]

Another time you might DCA in spite of cash on hand is if it's already obligated to other stuff (ex: we're planning some reno, so we're holding extra cash).

Agreed. Just another reason I'm holding onto extra cash in EF for tuition and future house projects, for when I move back home later this year.

When I started my Roth 6 years ago, I definitely wanted to get in quick to make up for lost time (same belief of time IN the market instead of timing like you stated). Which didn't seem to be a problem even when I started dumping into taxable account. But with the large swing or drop last year, I think it's left a kind of psychological impression to be a little more conservative this year. I have no plans to alter my existing portfolio but DCA seems to be calling to spread out my purchases.

But reading these responses have re-enforced my belief to stick with lump whenever available. The key reminder is stop looking at this in the short-term, and stay the course.

[disneysteve]

Doing a lump sum every January IS dollar cost averaging over 30 years. DCA can be weekly or monthly or quarterly or annual or whatever period you'd like.

[LivingAlmostLarge]

lump sum because I have it and i personally don't like having money moved monthly.

[parafly]

Lump sum into a money market fund. This gives you the tax benefit of a Roth IRA on admittedly small gains in interest.

Then DCA into a long term fund of your choice once a month. This gives you the benefit of spreading the cost basis from a single annual purchase to twelve annual purchases. It's DCA on a more granular level. It also gives the flexibility to strategically buy dips in the market. Almost every year has at least one or two of those "DOW is down 500-1000 points" days.

[cypher1]

I just did lump sum for the two funds I mentioned earlier, today for Roth. I also use Morningstar and My Stock Portfolio for tracking, by manually entering my transactions throughout the year. Call me lazy, but if I did set automated purchases, I'd have to update each one more frequently each month. So one less thing to manage. Lump sum for the win.