Author Topic: What is your investment "buy" cadence?  (Read 6726 times)

yandz

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What is your investment "buy" cadence?
« on: October 24, 2014, 09:43:21 AM »
I am just curious at what frequency you buy your investments.

I am paid bi-weekly and my husband semi-monthly, so maxed out 401k investments are obviously purchased 26x and 24x per year respectively - automatically.For our taxable investments, I tend to purchase just once a month - usually on the 1st (though with Vanguard, the buy turns into the 2nd).

Should I be increasing the  frequency? So instead of 5k 1x per month, I would invest 2.5k 2x per month to get dollars in the market sooner than later?

Obsessive much? I know...I'm sorry.  Just curious what you all do.

ZiziPB

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Re: What is your investment "buy" cadence?
« Reply #1 on: October 24, 2014, 09:52:56 AM »
I have exact same schedule as you do, except that it is through Fidelity.  401k twice a month and taxable once per month set up as an auto transaction on the 2nd of each month.

Philociraptor

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Re: What is your investment "buy" cadence?
« Reply #2 on: October 24, 2014, 10:03:20 AM »
Monthly, 401(k) on last business day of month, Vanguard IRA on the 5th of each month.

PathtoFIRE

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Re: What is your investment "buy" cadence?
« Reply #3 on: October 24, 2014, 10:04:05 AM »
For our workplace accounts, it works out to weekly which is some nice smooth DCAing (we both get paid biweekly, and are even on the same schedule, but DW's TSP deposits Thursday midnight right before payday, and my 401k doesn't deposit until the following Thursday, so that works out to weekly).

For aftertax and 529s, monthly at the beginning of the month.

I just started doing backdoor Roths, and may finally get an HSA this year if DW agrees to the HDHP work offers, and going forward, I will fund those at the beginning of the year, or at least as soon as the checking account recovers from the property tax bill.

YoungInvestor

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Re: What is your investment "buy" cadence?
« Reply #4 on: October 24, 2014, 10:06:10 AM »
Transaction fees may or may not kill the benefit.

Ignoring them, I'd go for it, but I know that I stick to once a month for this reason. I'd probably go for two months, but the market's on sale, right now, and I want to cash in on that.

PathtoFIRE

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Re: What is your investment "buy" cadence?
« Reply #5 on: October 24, 2014, 10:08:22 AM »
Monthly, 401(k) on last business day of month, Vanguard IRA on the 5th of each month.

Just curious why the 5th of the month? We used to have an advisor, and they setup an auto-withdrawal for our taxable account on the 4th of every month. When I took over the account, I briefly switched to the 1st, but my wife rolled her eyes when I told her, so I switched it back since "that's what we're used to".

Philociraptor

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Re: What is your investment "buy" cadence?
« Reply #6 on: October 24, 2014, 10:14:54 AM »
Monthly, 401(k) on last business day of month, Vanguard IRA on the 5th of each month.

Just curious why the 5th of the month? We used to have an advisor, and they setup an auto-withdrawal for our taxable account on the 4th of every month. When I took over the account, I briefly switched to the 1st, but my wife rolled her eyes when I told her, so I switched it back since "that's what we're used to".

Gives me a week after payday to move stuff around, make sure there will be enough in there when it gets drafted. I try and keep my checking account balance low, with paychecks arriving just-in-time. Since I get paid monthly and my wife every other week, I use Mint to track a month ahead on bank drafts.

Phil_Moore

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Re: What is your investment "buy" cadence?
« Reply #7 on: October 24, 2014, 10:30:53 AM »
Monthly to my pension account. Outside of that I only buy once a year when I do my rebalance in early April.  I get my annual bonus and the years tax-free ISA allowance opens up simultaneously, so it is just easier/cheaper.  I wish I could spread it out more, as yearly doesn't feel particularly regular, but I hate having unused space in the ISA so always fill up my allowance on day one (mustachian problems?).

Zikoris

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Re: What is your investment "buy" cadence?
« Reply #8 on: October 24, 2014, 10:31:02 AM »
Every payday I pay off my credit cards, set money aside for rent, and dump the rest into investments. I also have automatic payroll deductions in addition to that. So every two weeks.

My boyfriend does a big deposit every month or two into his accounts.

hodedofome

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Re: What is your investment "buy" cadence?
« Reply #9 on: October 24, 2014, 10:32:46 AM »
Buying once a month or twice a month won't matter for your long term returns. Don't worry about that.

Fuzz

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Re: What is your investment "buy" cadence?
« Reply #10 on: October 24, 2014, 02:29:40 PM »
I'm self-employed, with somewhat lumpy income. I contribute larger amounts to retirement accounts when I have them. I put in smaller amounts once or twice a week. I like the frequency of smaller amounts, since it feels like "I'm doing something" even if it's only a couple hundred. I try not to have more than $1000 to $1500 sitting in my checking account (more in an efund), so if it gets much above that I'll put it in retirement accounts.

There is a lot of talk about automatic savings deposits being the best way to go. If I had a regular paycheck, I probably would agree. But my as "often as possible, as much as possible" strategy works for me. It also reminds me that every $50 purchase could just as easily have been a retirement contribution. For a while, every time I bought something for myself, I'd put an equal amount in savings.

Eric

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Re: What is your investment "buy" cadence?
« Reply #11 on: October 24, 2014, 02:43:15 PM »
Buying once a month or twice a month won't matter for your long term returns. Don't worry about that.

Yep.  Not worth losing sleep over.  (assuming you're not paying a per trade fee)

dhlogic

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Re: What is your investment "buy" cadence?
« Reply #12 on: October 24, 2014, 03:04:35 PM »
I front load my TSP and traditional IRA to the max extent possible, meaning:

A single $5,500 contribution to my IRA on January 1st and 100% of my paycheck diverted to the TSP until the $17,500 limit is reached, which means I live off savings for the first 3-4 months of the year. The IRA contribution comes from savings during the previous year.

I invest excess funds in a taxable account on a monthly basis throughout the remainder of the year.

If I received some sort of match from my TSP contributions, I would have a different strategy to ensure I gained the maximum benefits from my employer, but this works well for me.

Dr. Doom

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Re: What is your investment "buy" cadence?
« Reply #13 on: October 24, 2014, 06:01:34 PM »
I front load my TSP and traditional IRA to the max extent possible, meaning:

A single $5,500 contribution to my IRA on January 1st and 100% of my paycheck diverted to the TSP until the $17,500 limit is reached, which means I live off savings for the first 3-4 months of the year. The IRA contribution comes from savings during the previous year.

Same here except 401(K) instead of TSP, and I'm just a tiny bit looser on the IRA contrib date, but try to have it done by mid-Jan at the latest..  Also: starting next year it'll be 18K instead of 17.5K into the employer-sponsored account. 

Limits have been raised.  The MMM community rejoices.

For taxable funds, I just chuck whatever money I have into a Vanguard account after every paycheck.  I'm paid monthly.  I used to do auto-investments but this made me sometimes have two transactions in the same month:  The auto-transaction, and a second one, to add any extra money available.  Now I feel it's easier just to manually push funds in a day or two after every pay-period, in a single transaction.  Don't even look at the market, just stuff money in there as per my AA.



Runge

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Re: What is your investment "buy" cadence?
« Reply #14 on: October 25, 2014, 07:41:08 AM »
My simple IRA is payroll deductible, so that comes out of every paycheck, but it just goes into a cash pool in my account. I'll purchase investments every quarter when I update all my numbers. The numbers tell me where my AA is at currently and how much I need to buy of particular investments to keep my AA on track.

I also have auto-deposits to my betterment account on a monthly basis which immediately gets invested due to how betterment works.

forummm

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Re: What is your investment "buy" cadence?
« Reply #15 on: October 25, 2014, 04:58:12 PM »
I front load my TSP and traditional IRA to the max extent possible, meaning:

A single $5,500 contribution to my IRA on January 1st and 100% of my paycheck diverted to the TSP until the $17,500 limit is reached, which means I live off savings for the first 3-4 months of the year. The IRA contribution comes from savings during the previous year.

I invest excess funds in a taxable account on a monthly basis throughout the remainder of the year.

If I received some sort of match from my TSP contributions, I would have a different strategy to ensure I gained the maximum benefits from my employer, but this works well for me.

You are throwing away an extra 5% increase to your salary for 8-9 months of the year by frontloading those TSP contributions. Why not set them to $17,500/26 each pay period and give yourself a 5% raise? You can setup auto investment for the difference if that worries you.

dhlogic

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Re: What is your investment "buy" cadence?
« Reply #16 on: October 25, 2014, 05:32:50 PM »
Hi forummm,

I don't understand how I can increase my salary by changing my contribution schedule, if you could explain that to me I would appreciate it.

As mentioned by the OP, I'm following a strategy spoken about by The Mad Fientist where he references an article from Paula of affordanything.com. Short answer is getting money into the market sooner than later is better for numerous reasons. Their ideas are outlined in the following posts:

Front-Loading
http://www.madfientist.com/front-loading/

Why Dollar-Cost Averaging Stinks
http://affordanything.com/2012/04/23/why-dollar-cost-averaging-stinks/

ZMonet

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Re: What is your investment "buy" cadence?
« Reply #17 on: October 25, 2014, 05:47:35 PM »
DHLOGIC -- My understanding is that a TSP match (the gov. 5% contribution) is only made in the pay periods that you contribute.  I think forummm is saying that you're losing out on that match for those months where you make no TSP contribution.

dhlogic

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Re: What is your investment "buy" cadence?
« Reply #18 on: October 25, 2014, 05:52:36 PM »
ZMonet, yep that certainly makes sense. In my first post I mentioned that if I received a match I would still front load, but ensure I contributed for the rest of the year at a minimal rate to maximize the employer match.

Unfortunately I am a member of the uniformed services and do not receive any match for my TSP contributions.

2Birds1Stone

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Re: What is your investment "buy" cadence?
« Reply #19 on: October 25, 2014, 06:27:38 PM »
Paid Weekly so I do 25% pre tax into 401k and $106 into Roth auto-deduction on payday. Dollar cost averaging FTW! 

Wile E. Coyote

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Re: What is your investment "buy" cadence?
« Reply #20 on: October 25, 2014, 09:20:56 PM »
Paid Weekly so I do 25% pre tax into 401k and $106 into Roth auto-deduction on payday. Dollar cost averaging FTW!

401(k) goes in semi-monthly.  Taxable goes in weekly.  529 goes in monthly. IRA goes in in January.  I may shift the amounts around depending on the time of year (i.e., when the bonus hits, when OASDI max is reached, when I redetermine W-2 withholding in the fourth quarter, when the market drops).

forummm

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Re: What is your investment "buy" cadence?
« Reply #21 on: October 26, 2014, 08:02:05 PM »
ZMonet, yep that certainly makes sense. In my first post I mentioned that if I received a match I would still front load, but ensure I contributed for the rest of the year at a minimal rate to maximize the employer match.

Unfortunately I am a member of the uniformed services and do not receive any match for my TSP contributions.

I thought all FERS employees received up to a 5% match. But your situation may be different.

sol

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Re: What is your investment "buy" cadence?
« Reply #22 on: October 26, 2014, 08:05:42 PM »
I thought all FERS employees received up to a 5% match. But your situation may be different.

The TSP rules are different for military peeps.  Better in most ways, except for the no matching in most cases.  A lucky few get that, too.
« Last Edit: October 26, 2014, 08:09:06 PM by sol »