#RothIRA #retirementgoals How do you invest in your Roth IRA? Lump sum, monthly, or bi-weekly? 2022 is around the corner which means i’m focused on reevaluating 2021 and what I'm going to change going into next year. A Roth IRA is a tax-advantaged retirement account, which allows you to withdraw tax-free when you retire. As opposed to a brokerage account like public... where you can pull out money any time... but you pay a capital gains tax. If your goal for investing is retirement, this should be a no-brainer in your investment strategy. You are only allowed to contribute $6000/year... so if you are able to max out your account, I would highly recommend doing that before you invest in a brokerage account. (**If you are late to Roth IRAs don't worry... You have until your tax deadline (April 15th 2022) to contribute towards your 2021 contributions). There are a couple of different investment strategies within a Roth IRA (or traditional IRA): lump-sum investing: some people contribute all $6000 in January at the start of the year. You risk poorly timing the market but in the long term lump sum usually beats DCA. This also assumes you ain’t broke broke 😭 #struggleisreal monthly: invest $500/month (or however much you can afford). You might be averaging up over time but you have more upside than averaging up every week biweekly/weekly: you never have to worry about timing the market... you might decrease your overall return if a bull market continues and you have to average up, but we can never time the next downturn so buying weekly/biweekly ensures that if the market took a downturn you would get in on discounts. ---------- 2021 was my first year of investing. But since I opened my Roth IRA before my tax deadline... I invested a lump sum of $6000 to max my 2020 contribution. I divided it between index funds and some dividend stocks. I then invested $500/month this year to max out my 2021 contributions. Meanwhile, on public, I bought $50 of $VOO every Friday. My S&P fund in my RothIRA massively outperformed my DCA of $VOO here on public. this is because when you DCA you often average up so you don't earn the actual performance of the fund. not to mention... I joined public a couple of months after opening my retirement account... which also contributed to the lower return. ---------- So my question for today is... in 2022 are you doing a lump sum contribution? are you going to contribute monthly? Or bi-weekly as you get paid? ---------- *disclaimer: if you are in the position where you aren’t able to max out a Roth IRA, know that any contribution helps because you can’t go back in the time and contribute to previous years. progress is progress and that’s okay 🙌🏼
lump sum15.72%
monthly21.57%
bi-weekly or weekly23.95%
i don't have an IRA yet38.76%
547 votes • Ended 01/05/22
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@spinchange yeah I haven’t done it that way either but it does sound appealing.
Lump sum early on!
Backdoor Roth and use lump sum early. Time is the one thing you cannot buy.
@ctsshah if buying opportunities arise and you’ve already maxed out your account early on do you rearrange your investments or just use other accounts to buy the dip?
@TD1 true!! When I started investing in my Roth IRA I kept wondering why I hadn’t start sooner! Definitely shouldnt wait to get started
I’ve shifted towards dividends so I don’t worry about it. Let the dividend reinvest. I’ve consolidated underperforming ones into the better performing ones
Also, look for employer Roth 401k program with $20,500 contribution limits and $27,000 for those over 50 years old
Just like @ctsshah said. A great way to save and a wonderful tax write off if you have your own business.
For all those who love and care about Roth IRA (as I do too), you should pay enough attention on Biden's Build Back Better Act's passage in the Congress as all the goodies in this Act that I support, one section in it is to KILL the Roth IRA contribution starting Jan 1, 2022 (should it pass). The Act passed House and in sitting in Senate. Dems are pushing it, Reps are pulling it.
Haven’t opened an IRA yet but want to, advice for a beginner? Im a full time student with two part time jobs! Trying to invest in my future
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Victor@victor
I personally try to time putting money away every paycheck. Works for me that way 😁
Roth IRAs are great, but I invest in a 401k because my employer provides matching! I am currently up to 7% matching of my contributions.
Have one in a bank in buffalo let the bank work the money for u at a rate u can afford
Statistically the more frequently you DCA the closer to the SMA you’ll wind up… more frequent is IMO better
Highbuyer@highbuyer
$115.38/week set on automatic. I used to stick my tax return in there but the problem with lump sums is you are buying the market “as is” when you deposit your funds. Spreading out your investment gets an average cost over the year.
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My ROTH requires deposits of $100 minimum to start and $30 thereafter so I’m thinking of saving up $1 for 100 days to meet that and then jumping in. My plan is a $1 a day for now
@ctsshah I vibe with that
@TD1 my work only offers a traditional 401k but I definitely still take advantage of it!!
@retiresoon so many benefits!!
@mjlee they aren’t trying to kill the Roth. my understanding of the plan is that they are trying to get rid of the backdoor Roth IRA loophole and target the ultra rich who are using it as a tax shelter
Direct quote from the attached article: “Lawmakers would also close "backdoor Roth" tax loopholes, used largely by the rich, and prohibit further individual retirement account contributions once thos…See more
@heiserm that’s awesome!! I’m so proud of you. I wish I started when I was a student.
I would select a Roth IRA that requires zero minimum and commission free trading. I personally like Fidelity because they have fidelity exclusive index funds with zero expense ratios, but there are lots of great options.
https://www.fidelity.com/mutual-funds/investing-ideas/index-funds
My IRA is made up of Index…See more
@victor I’ve done that for the most part this year and it’s been nice 😊
@daddystanton nice! I think everyone should do both if they can. I invest my employer match in my 401k first cause it’s free money and then after that max my RothIRA.
@damian6 yeah having automated funds are nice sometimes as long as it’s not too expensive! Passive investing is great if allows you to work hard at your job so your investment money can work for you
@mom1023 what was interesting is that I started my FNILX (Fidelity’s version of $VOO in feb and have a 20% return. But on public I started DCA every Friday of $VOO around March/April but even still it only has a 8.9% return. So years like this I think lump sum would have been better but over a longer period of time or in corrections I think it would be a completely different story which is why I love…See more
@sydward yes; with a lump sum some years you’ll get lucky and others you won’t. Your goal is as close to the smoothed moving average as you can get, so outperforming that (ie any bull market), you’ll be green. Even if you get something beneath the SMA at that time if the market turns bearish you might wind up in an unpleasant position. I’m glad it worked out doing a lump sum, though!
@positivityandsass I would love that feature I think it would promote a lot of long term investing and education here.
Especially since brokerages are where people tend to do riskier investing it would be good to see the social feature and people sharing what they’re doing for retirement
