Is a monthly allocation better than yearly?

[joenorm]

I typically max out my Roth at the end of December or beginning of January.

I do so because I usually receive a "chunk" around this time that I reserve for this purpose.

I'm beginning to wonder if it is at all better to stagger that money over the year than to always do it in one drop? It is especially of interest to me this year as I have watched the market drop around this time so it begs trying to time the market.

If there is one thing I have learned here it is that one does NOT time the market, plain and simple.

Moving forward, would a better strategy be to allocate that money monthly, knowing I'll have it at the end of the year?

[MustacheAndaHalf]

Sometimes you will encounter "timing the market" problems, where January is especially high priced.

But most of the time, you will benefit from "time in the market", meaning your average purchase is in January instead of in June.  In general the market goes up, so being invested for an extra 5+ months is usually a good idea.

[jacoavluha]

Moving forward, would a better strategy be to allocate that money monthly, knowing I'll have it at the end of the year?

later (or never) is better, if the market is going down
earlier is better, if the market is going up

[bluebelle]

you got very lucky 'timing' the market this year, but that's just luck.

It's not clear by your post whether you mean, take the 'chunk' of money and just buy 1/12th into the market every month in 2019, or you mean, load your roth for 2018 in december 2018, and start contributing monthly starting in 2019.  If it's the former, just do the lump sum, if it's the latter, why having you been doing it all along (ie you had spare $ every month, but waited until the end of the year when you get your 'chunk')

[MustacheAndaHalf]

Moving forward, would a better strategy be to allocate that money monthly, knowing I'll have it at the end of the year?

later (or never) is better, if the market is going down
earlier is better, if the market is going up

Knowing the market is "going down" now doesn't tell you where the market will be in the future.  You need to know if the market will go down in the future, not just if it has gone down recently.

[chasesfish]

FWIW - I always fund my IRAs on the first business day of the year for that year.  So 2018's contributions went in on January 2nd.

Its a tax move for me.  I have assets in a regular brokerage account that are spitting off dividends and hopefully growing and that's subject to capital gains / income taxes.  The money invested in the Roth IRAs are not.

[jacoavluha]

Moving forward, would a better strategy be to allocate that money monthly, knowing I'll have it at the end of the year?

later (or never) is better, if the market is going down
earlier is better, if the market is going up

Knowing the market is "going down" now doesn't tell you where the market will be in the future.  You need to know if the market will go down in the future, not just if it has gone down recently.

Agreed. Note, I didn’t use the words “now” or “recently” in my post.

[kenaces]

I typically max out my Roth at the end of December or beginning of January.

I do so because I usually receive a "chunk" around this time that I reserve for this purpose.

I'm beginning to wonder if it is at all better to stagger that money over the year than to always do it in one drop? It is especially of interest to me this year as I have watched the market drop around this time so it begs trying to time the market.

If there is one thing I have learned here it is that one does NOT time the market, plain and simple.

Moving forward, would a better strategy be to allocate that money monthly, knowing I'll have it at the end of the year?

Re-read the bold part and listen to yourself :)

Over the long run putting 100% of the money into a good diversified portfolio is better than than waiting.