Author Topic: Fund 2015 IRA and HSA all at once?  (Read 1805 times)

rairmet

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Fund 2015 IRA and HSA all at once?
« on: February 01, 2015, 09:05:07 AM »

I have enough money in my savings account to fund my IRA and HSA entirely this year right now for 2015.  Would you drip the money into those funds gradually, or just do it all at once?? 

With my work situation this year, my income is just going to meet my expenses, so I am not planning on funding the IRA or HSA out of new money flowing in...

Thanks!

Rachel

seattlecyclone

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Re: Fund 2015 IRA and HSA all at once?
« Reply #1 on: February 01, 2015, 11:07:34 AM »
Investing all at once right now is best if the market goes up over the next year. Investing all at once on December 31 is best if the market goes down over the next year. Investing a little at a time is never the best. It's what you do if you believe a market increase and a market decrease are equally likely and you are too scared to bet on one or the other.

The market goes up more often than it goes down, so that's where most of my money is...this year and every year.

wannabfrugal

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Re: Fund 2015 IRA and HSA all at once?
« Reply #2 on: February 01, 2015, 11:34:52 AM »
I researched this several years ago, can't find the research right now but I think you should find similar articles searching here: https://www.bogleheads.org/

In general, if it is long term money, you are best served putting it in immediately and not "dripping" it.  (if you know what the market is going to do, then by all means wait lol)

In my experience emotions, not math typically control this and like seattlecyclone said, if the market goes down in the next year, you'll likely kick yourself and feel like you should have waited.

Psychstache

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Re: Fund 2015 IRA and HSA all at once?
« Reply #3 on: February 01, 2015, 11:36:38 AM »
Over the long term (ex. your lifetime) the stock market will go up, based on historical context. So, in theory (and if you believe in the historical 7% return of the market and expect that to continue) the sooner you invest, the more you have to gain.

I have an excess of funds in taxable accounts that are not earmarked for anything, so every January I cash out enough to fully fund my HSA and IRA in January.

RangerOne

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Re: Fund 2015 IRA and HSA all at once?
« Reply #4 on: February 01, 2015, 11:41:00 AM »
    I guess it depends on philosophy. But the sooner your money is invested the sooner it can start growing. The flip side is in the short term you could get real unlucky and the market could crash the day after you put in a lump sum. In which case your investment would have bought you a lot more had you waited.

But that gets you down the dark road of market timing, which can lead you to stagnate investments when you shouldn't for fear of market drops. So holding that strategy may just as easily lose you a tone of money in the future.

    I am getting ready to fund half my 401k for the year in one shot. I hear people saying that the US equities are likely to take a hit in the form of a correction soon, which would suck because a good 40%-60% of my investments are in US equities. But it makes sense because they have had a steady growth over the last 3 years.

   To assuage this fear, I am first pretending I am not dumping a large chunk of money in and only caring about the asset allocation once its there. The correct response to a potentially over-performing asset, from my limited reading, is to re-balance your portfolio to shift money away from your over-performing investments like US equities into investments that have been under performing like international stocks. I am making a 10% re balance this year. This is just buying low and selling high. I am selling some of my high gaining investments to buy up some under performing investments for less than they will cost me in the future. I am re-balancing from 55%-60% US stock investment to a 45%-50% US stock investment and increasing my foreign allocations from 30%-35% up 40%-45%.

This is the gist of the simple strategies I have read from index investing. But I am also young so if anyone has any better advice I am listening.
« Last Edit: February 01, 2015, 11:47:04 AM by RangerOne »