Author Topic: Front-loading retirement accounts vs loading in September  (Read 2563 times)

shanaling

  • 5 O'Clock Shadow
  • *
  • Posts: 92
Front-loading retirement accounts vs loading in September
« on: October 10, 2015, 11:12:15 AM »
Mad Fientist has advocated for front-loading your retirement accounts in the beginning of the year in his post http://www.madfientist.com/front-loading/ due to longer exposure time to the stock market for compounding interest to work.

However, history has shown that September/October are the best months to buy.

Would it be a better idea to load your 401(k) in September? Which way do you favor?



MDM

  • Senior Mustachian
  • ********
  • Posts: 11527
Re: Front-loading retirement accounts vs loading in September
« Reply #1 on: October 10, 2015, 11:33:58 AM »
Mad Fientist has advocated for front-loading your retirement accounts in the beginning of the year in his post http://www.madfientist.com/front-loading/ due to longer exposure time to the stock market for compounding interest to work.

However, history has shown that September/October are the best months to buy.

Would it be a better idea to load your 401(k) in September? Which way do you favor?
History has also shown that the data can be tortured to give pretty much any answer the torturer wants.  E.g., see
http://education.howthemarketworks.com/news/best-months-for-stocks/
http://investorplace.com/2013/11/november-still-best-buying-month-year/
http://www.moneychimp.com/features/monthly_returns.htm

Retire-Canada

  • Walrus Stache
  • *******
  • Posts: 8977
Re: Front-loading retirement accounts vs loading in September
« Reply #2 on: October 10, 2015, 01:08:02 PM »
Which way do you favor?

As soon as I have money available each month I invest it. I invest every month of the year. I fill my tax advantaged accounts first and then my non-registered accounts.

Retired To Win

  • Handlebar Stache
  • *****
  • Posts: 1493
  • Age: 76
  • Location: Virginia
  • making the most of my time and my money
    • Retired To Win
Re: Front-loading retirement accounts vs loading in September
« Reply #3 on: October 11, 2015, 07:47:14 AM »
Which way do you favor?

As soon as I have money available each month I invest it. I invest every month of the year. I fill my tax advantaged accounts first and then my non-registered accounts.

When I was still doing it, I did it once a year in a lump sum.  But not based on any strategy.  Based on procrastination and laziness.  If I had really thought about it, I do think I would still have done the investing in a lump sum but at a time when the market seemed to be down (which might mean in October).

Retire-Canada

  • Walrus Stache
  • *******
  • Posts: 8977
Re: Front-loading retirement accounts vs loading in September
« Reply #4 on: October 11, 2015, 10:52:41 AM »
When I was still doing it, I did it once a year in a lump sum.  But not based on any strategy.  Based on procrastination and laziness.  If I had really thought about it, I do think I would still have done the investing in a lump sum but at a time when the market seemed to be down (which might mean in October).

I'm known for my laziness!

When I get paid at the end of the month I just set aside my taxes, pay my bills and transfer the rest to my brokerage account. Online banking and investing is so easy.

What happens if you accumulate your yearly savings and the markets keep going up? Do you roll them into the next year and keep waiting?

The liberating thing about my investment plan is that I don't pretend to know what's going to happen and put the money in a diversified set of index funds rebalancing by contributions to whichever ones are most off my asset allocation. I don't have to worry about what the market is going to do and on balance I figure I am better invested than waiting with a stash of cash.