Author Topic: How do you have your automatic investing set up  (Read 1189 times)

MrsDinero

  • Pencil Stache
  • ****
  • Posts: 935
How do you have your automatic investing set up
« on: October 25, 2016, 02:57:06 PM »
I'm at the point where there isn't much more for me to do.  My husband and I have trimmed our budget.  Our only debt is our mortgage and we are both saving/investing almost 50% of our income.

A couple of months ago I set up an automatic investment for Vanguard, $2k a month.  I gets taken out of my bank about on the 1st and the 15th.  When I have watched some of the stock prices, I noticed a few times prices were lower on the weeks where I was not having money invested.

I'm considering changing it to $500/week instead of $1000 twice a month.  I'm not trying to time the market because I figure if I set up a weekly investment then I would be able to get more of the stock when it dips without having to really pay attention.

Does anyone see a downside on doing it this way?

I was wondering how others have their automatic investing set up? 

Cycling Stache

  • Bristles
  • ***
  • Posts: 471
  • Age: 43
Re: How do you have your automatic investing set up
« Reply #1 on: October 25, 2016, 05:16:28 PM »
I'm at the point where there isn't much more for me to do.  My husband and I have trimmed our budget.  Our only debt is our mortgage and we are both saving/investing almost 50% of our income.

A couple of months ago I set up an automatic investment for Vanguard, $2k a month.  I gets taken out of my bank about on the 1st and the 15th.  When I have watched some of the stock prices, I noticed a few times prices were lower on the weeks where I was not having money invested.

I'm considering changing it to $500/week instead of $1000 twice a month.  I'm not trying to time the market because I figure if I set up a weekly investment then I would be able to get more of the stock when it dips without having to really pay attention.

Does anyone see a downside on doing it this way?

I was wondering how others have their automatic investing set up?

(1)  You cannot time the market.

(2)  The market generally goes up.

Therefore, the money should go into the market as early as available.   If you're pulling from a paycheck, the money should go in as soon as it's available.

I have mine set to buy in on a Tuesday after a Saturday paycheck direct deposit (just in case the direct deposit gets delayed to Monday, which I think happened once).

terran

  • Handlebar Stache
  • *****
  • Posts: 1875
Re: How do you have your automatic investing set up
« Reply #2 on: October 25, 2016, 05:40:29 PM »
This is just another way of asking whether you should dollar cost average. Here's a good read on that: https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf

The takeaway, as Cycling Stache said, is that on average the market goes up, so on average you'll do better by investing as soon as you have the money available rather than trying to put it in more slowly to try to miss the highs.

I would probably still tend towards trying to invest a good sized chunk at a time just to avoid lots of little tax lots when you go to sell, but the once or twice a month at $1-2k you've been doing should be fine for that.

MrsDinero

  • Pencil Stache
  • ****
  • Posts: 935
Re: How do you have your automatic investing set up
« Reply #3 on: October 26, 2016, 08:40:12 AM »
Thanks @terran  Dollar Cost Averaging is exactly what I was looking for, without knowing it.  I figured the more I could invest on a regular basis would get me closer to being able to buy at a lower stock price so it evens out the purchases at a higher price.  I think I will stick with twice monthly for now. 

@Cycling Stache, I have a weird set up in that my Vanguard money comes out of my ER fund.  Right now I have too much money in my ER fund, so I'm investing that "extra money" until I get to only 1 year living expenses.