If you wait for a 5% correction, or even 10% - - you won;t even notice the difference 30 years from now when the market has appreciated 800%.
Just get the money invested.
BTW - - "Dollar cost averaging" has been shown to perform WORSE in most cases. It's really just a ruse to make you feel better about not dumping all your money into the market at once. Unfortunately, it doesn't work most of the time.
You can put the money into your Roth IRA without investing it in anything. It will be automatically be invested in money market funds, which bear almost no interest but are completely safe.
When you're ready to move into stocks, you'll have $5k in cash waiting to be invested.
If you're worried that the stock market is at a peak (you're not the only one; many pros agree with you), then you can invest in a short term bond fund for now.
Put the $5k in the account. Don't miss this opportunity for tax-free growth.
You do realize that you don't have to necessarily put retirement funds into stocks?? I am at this moment about 40% in equities, the rest is in bond funds and cash. That is maybe too conservative, but I know others who have their entire IRA in cash making 0.1% or whatever they pay.
I came across a portfolio ideal that is interesting: This uses Vanguard indexed funds, which have very low costs and excellent returns. It is simple: 25% each in their 500 Index (tracks S&P 500), total European Index, US small cap index and total bond market index. This is about 75% equities.
Another idea is to dollar cost average into a target fund or ETF. I'm doing some of that now. Once a month I move a fixed amount from cash or bonds to a 2025 target fund - that fund in itself is 25-30% bonds and 70% equities, and will be increasingly bonds as 2025 approaches. This accomplishes two things: I minimize the hit of a big market drop if one happens (and it will) and keep a decent bond/stock balance without having to worry about it.
Put it in now to get started. I will give you an iron clad guarantee that the market will be higher in 30 years than it is today so don't worry about it being too high now.
In the future sign up for an automatic deposit plan with whatever brokerage firm you use and put in an equal amount every month that will allow you to average out your investments over time.
Go for it.
Roth IRA is funded with taxed income so there's no advantage to fund now - since it will not reduce your tax liability. Look at it this way - you can invest the same amount on April 17th or June 17th or October 17th and you'd have $5000 in your Roth IRA account - it would be a 2014 contribution - instead of 2013. You can do the same thing for twenty years - always later in the year.
33 years from now - the extra amount you gained from waiting six months to invest might not be as important as how you managed the investments inside the ROTH IRA in that 33 year period..
Dont focus on today's market news, keep a diversifed portfolio and invest long term through dollar cost average.
Max out for the 2013 year and invest monthly for the 2014 calander year.
Best of luck and stop worrying. When the bear market begins, I dont check my statements or watch CNBC. I pay my investment like other bills
Take Care
Many investors can't watch the market on a daily basis. the ups and downs affect their thinking.
you may be one.
invest wisely and don't watch too closely.
WTF "all time high." Who cares?
Do you expect the market to be higher or lower in 30 years?
Higher.
This is a no-brainer.
Don't be the fool who is paying all that freaking tax 30 years from now because they were worried that the "market" was 10% above where "it should be" 30 years ago.
Go look at where the market was 30 years ago.
Roth IRA is the best free lunch someone your age is EVER going to get.
I am a 32 y/o professional and last year I decided to open up a Roth IRA and max it out at $5K. For 2013, I have not yet contributed and I have less than a week. I kept waiting for the market to drop but it never did, so now I will probably be investing at an all time high. I know, I know, I tried to "time the market".
I know retirement funds are for 30 years down the line but I still feel like the market is too high. Should I invest $5K for 2013 anyways? My plan was to put in $5K every year. Doing it when the market is at an all time high makes it less appealing however. Do I just stick with the fundamentals and not worry about what the market is right now?
Your advice is appreciated, thank you!
