Could Use Advice on When to Invest IRA Funds

[Willbrewer]

I'm just starting to build my stash for retirement (a little late, I'm afraid). This year I was in a position to be able to start an IRA account, contributing both last year's and this year's max contribution ($13,000 total).

I also put $3000 into an individual trading account, plus plan to max out a Health Savings Account this year, too.

I played with short term trading for the first month, and came out about 3% ahead, but I couldn't stand the pressure of wondering if/when I'd lose out big time. So I sold all my holdings and kept the small profit.

So to keep my sanity, I plan to invest in a few good index funds, probably Vanguard. But when should I buy? I keep hearing that the market is due for a correction, and kind of feel like I should wait for the drop before I purchase the funds?

Opinions?

Thanks,

Bill

[alm0stk00l]

I always buy whenever I have the money. I am not a big fan of "waiting for a correction" or any other type of timing. If I buy stock one day and it goes down, I will just buy more as soon as I have money again and that will lower my cost basis. The odds of me only ever having money to buy when the market is high seem pretty low. There are costs with not having your money invested(opportunity cost and inflation) and it is really hard(impossible) to measure those against the odds of a market correction. There was a time when the market was $1000 and everyone though it was way too high and there was a time when it was $5000 and everyone thought it was way too high and so on. The simplest approach is to just invest what you have whenever you have it.

This only applies to money you are going to invest anyway and it is only my own approach.

[Eric]

I keep hearing that the market is due for a correction, and kind of feel like I should wait for the drop before I purchase the funds?

Whoever you're hearing this from, if they could actually predict these things, they wouldn't need to be making these predictions.  They'd be rich and living a life of leisure, not writing articles or appearing on TV.

http://jlcollinsnh.com/2013/01/04/how-to-be-a-stock-market-guru-and-get-on-msnbc/

The best time to invest is yesterday.  The second best time is today.

[Willbrewer]

Thanks for your thoughts.

[wtjbatman]

With your age, I'd pick a nice safe three fund portfolio with something like 60/40 stocks to bonds. Invest in low fee mutual funds/ETFs that follow the broader market, and you'll do well. The key will be just putting money in and letting it grow for the next 15 years (or whatever your exact retirement horizon looks like). Start now, as it's all about time in market, not timing the market.

[soccerluvof4]

^ +1 I use 4 but agree totally with him.

[Willbrewer]

I pulled the trigger today and made an IRA account purchase that I feel good about. Four ETFs (VTI, US stock index, 47.5%- AGG, US Bond fund, 25%, VEA, Foreign developed markets, 22.5%- VNQ, REIT index, 5.0%).

All are commission-free ETFs, have low total expense ratios (0.05% - 0.1%), and pay dividends from about 2% - 3%.

In addition, I have a bit of physical precious metals stored away, and cash in an individual trading account that I can use to purchase stocks at discount prices if/when the market corrects.

Now I can think less about investing for a while and focus on something else... like increasing my income.

Thanks again for your input.

Bill