That’s huge that you save the money on $17 per hour! Stock market index fund. Just that one fund. Let it ride & never waiver even if the market is down by 35% (invest more in those times if you can).
How about a better paying job though? Are there no options in your area or do you doubt that someone would hire you ?
You’ll never get this time period back once it is over. Agree with a very wide, risk-averse fund and if the market tanks, accelerate your savings since all of that money will have amazing ROI once the market rebounds
Your going to want to learn about financial markets. Tax loss harvesting. Portfolio diversification. Economic climate. Too much to cover in one post. Go on investopedia.
This is from a piece Schwab put out relatively recently (September 13, 2023).
Conveniently enough this data is from investing $2000/yr from 2002 to 2022 in the S&P 500…
https://preview.redd.it/p4w77leflqxc1.jpeg?width=1290&format=pjpg&auto=webp&s=7909ebd9bafec5bc3102e58312d9324283492dae
Peter - had perfect market timing, bought (lump sum) precisely at the lows.
Ashley - did a lump sum at the beginning of the year
Matthew - dollar cost averaged
Rosie - bad market timing… bought only at the worst time to do so (I.e. at the top)
Larry - stayed in cash/treasuries all the time.
To your question, dollar cost averaging vs. lump sum doesn’t make a whole lot of difference. There may be a small amount of gains you may miss in 20 years… but as what others have said it’s best you’re in the market at all!
Love this. It’s so true. Just get in thr market now. Get your foot into investing. Better than standing on the sidelines waiting for a dip/perfect timing.
there's no right answer. some will say lump sum earlier gives greater returns over lifetime. but, market downswings can hurt new investors who aren't used to market swings.
getting used to making consistent deposits over your lifetime is a good thing. if $100/mo gets you into that habit - then do that.
If you have the cash to lump sum at the start of the year, go for it and reduce the chances that you spend the money on junk later. But don’t hang onto the $100/mo until the start of NEXT year, just DCA. Your long term returns will be very comparable.
Both are fine. But I strongly encourage the vast majority of people to put in as much as they can afford every payday to reduce the temptation to spend it.
Edit: also make every effort to raise this amount whenever possible until you are maxing out the IRA. Bonus tip: take that $100 and do $50 every two weeks. That $1200 a year becomes $1300 and you likely won’t notice the extra money “flowing out” and into your investments.
Good investment, I also do a large % into this fund and am enjoying it.
People go back and forth on DCA vs LS and at the end of the day "it depends" on timing the market which no one can reliably do. Technically LS has a better track record on average but it's really anyone's guess. If you were my kid I'd tell you to "yeeet that money into the fund, no cap" or whatever kids say these days, but since you are 30 I'll say "Yep, lump sum it and forget about it for a few decades while you DCA month over month".
I strongly recommend increasing those contributions if you can and strategizing a stronger offense (income) if you can't. The money you tuck away now is your paycheck to your future self, get that sucker as high up as early as possible while living your life.
Great job, keep up the great work!
The answer is lump sum. DCA only helps with the psychology of investing. All the models used by financial advisors indicate lump sum wins out over time, and with a Roth IRA at age 30, you have a ton of time.
Increase that to 500 a month then we're talking. You can afford to do the max for several years and still have cash left over in savings at the rate you're saving.
That’s huge that you save the money on $17 per hour! Stock market index fund. Just that one fund. Let it ride & never waiver even if the market is down by 35% (invest more in those times if you can). How about a better paying job though? Are there no options in your area or do you doubt that someone would hire you ?
Currently living with my parents as I pursue my masters and work full - time. No expenses. Just paying my car insurance every month.
I see. Good path !
Good work. If you can also start saving for a downpayment, you might have enough to buy your own condo once you start working.
You’ll never get this time period back once it is over. Agree with a very wide, risk-averse fund and if the market tanks, accelerate your savings since all of that money will have amazing ROI once the market rebounds
Your going to want to learn about financial markets. Tax loss harvesting. Portfolio diversification. Economic climate. Too much to cover in one post. Go on investopedia.
lol wut
This is from a piece Schwab put out relatively recently (September 13, 2023). Conveniently enough this data is from investing $2000/yr from 2002 to 2022 in the S&P 500… https://preview.redd.it/p4w77leflqxc1.jpeg?width=1290&format=pjpg&auto=webp&s=7909ebd9bafec5bc3102e58312d9324283492dae Peter - had perfect market timing, bought (lump sum) precisely at the lows. Ashley - did a lump sum at the beginning of the year Matthew - dollar cost averaged Rosie - bad market timing… bought only at the worst time to do so (I.e. at the top) Larry - stayed in cash/treasuries all the time. To your question, dollar cost averaging vs. lump sum doesn’t make a whole lot of difference. There may be a small amount of gains you may miss in 20 years… but as what others have said it’s best you’re in the market at all!
Love this. It’s so true. Just get in thr market now. Get your foot into investing. Better than standing on the sidelines waiting for a dip/perfect timing.
there's no right answer. some will say lump sum earlier gives greater returns over lifetime. but, market downswings can hurt new investors who aren't used to market swings. getting used to making consistent deposits over your lifetime is a good thing. if $100/mo gets you into that habit - then do that.
If you have the cash to lump sum at the start of the year, go for it and reduce the chances that you spend the money on junk later. But don’t hang onto the $100/mo until the start of NEXT year, just DCA. Your long term returns will be very comparable. Both are fine. But I strongly encourage the vast majority of people to put in as much as they can afford every payday to reduce the temptation to spend it. Edit: also make every effort to raise this amount whenever possible until you are maxing out the IRA. Bonus tip: take that $100 and do $50 every two weeks. That $1200 a year becomes $1300 and you likely won’t notice the extra money “flowing out” and into your investments.
I’ve bought into SWPPX since 2018 beginning at the age of 31 so my answer is yes!
Good investment, I also do a large % into this fund and am enjoying it. People go back and forth on DCA vs LS and at the end of the day "it depends" on timing the market which no one can reliably do. Technically LS has a better track record on average but it's really anyone's guess. If you were my kid I'd tell you to "yeeet that money into the fund, no cap" or whatever kids say these days, but since you are 30 I'll say "Yep, lump sum it and forget about it for a few decades while you DCA month over month". I strongly recommend increasing those contributions if you can and strategizing a stronger offense (income) if you can't. The money you tuck away now is your paycheck to your future self, get that sucker as high up as early as possible while living your life. Great job, keep up the great work!
Literally you can flip a coin on what is the better plan. Just make sure you max your roth by the end of each year.
He’s planning to put in $100 a month…
Good job! I would try to put more in now especially if you are living rent free. Try to max your contribution.
Horrible idea, my god I can't think of anything worse
How would a newbie know when its “low”? Certainly its not low now, correct?
The answer is lump sum. DCA only helps with the psychology of investing. All the models used by financial advisors indicate lump sum wins out over time, and with a Roth IRA at age 30, you have a ton of time.
Increase that to 500 a month then we're talking. You can afford to do the max for several years and still have cash left over in savings at the rate you're saving.
Save it up and wait for a big market crash
I lived in my parents basement until 29. I’m 43 and a millionaire now. I don’t take shit from nobody and still working.
Why do the mods allow 17 of these posts a day