First off, this is my first post here, woohoo for that! So here I go.
Not too long ago, the market was doing okay. The DOW was around 13,000 something points and no one, at least not an average person like me, could imagine it going down to 8000 in such a short time. When the market started going down a little, I thought “Great! I can now buy more”. My fund’s NAV had gone down by a few dollars and I still had room to contribute on my Roth IRA. So I maxed out my Roth IRA for the year, I mean with such great prices I was bound to do well!
And then companies started folding, Lehman Bros went away, Wamu sucked away everyone’s money, and the market kept going down with no end in sight. Well, wouldn’t it have been nice to be able to contribute NOW when the same fund is down by almost 45-50%? But of course my brilliant idea of maxing Roth IRA back then has left me thinking “What the heck was I thinking?”!
Lesson Learned! Don’t ever max out Roth IRA before the end of the year. Of course everyone knows that , I do too, but I was silly enough to max it out mid-year (go ahead, laugh, i don’t mind) – Instead of contributing every month, as I had been doing, I maxed out and I’m now missing out!
So, from now on (as in starting next year!), no matter what, I’m never going to steer away from my automatic contribution to my Roth IRA.
3 Comments until now.
Imagine if the market was up 40-50% and you hadn’t maxed out your ROTH. you’d be kicking yourself right now. So either way, it doesn’t really matter. You got unlucky this year, but in January 2009, why not max our your ROTH again when the market is this low? As long as you stick with your plan in the long-term it all averages out. ROTH is only 5K max so it probably doesn’t matter if you max it out. But with larger sum, it’s probably better to invest over few months or so. You’ll have cash on hand to buy more if the market goes down.
I totally agree with rupnue1. You never know what the best time to invest is specially with a limited fund such as ROTH IRA 5k. I maxxxed out my ROTH in July when the market was down, and invested in financials and some tech stocks when the supposedly bear market started (with the market down 20% from the yty high). Remember that historically the market doesn’t stay at its bottom for a long time.
Thus I invested in SAP, BP, BAC, ATVI, AAPL then and actually got out of these position s when they turned a profit within a month or so. But wasn’t lucky when I became greedy with some solar TSL, financials BAC,C, and healthcare WCG (this one killed me with some litigation lately).
Moral that I learned, do keep some cash but you also have to be aggresive in bad times if you want to grow your portfolio. Hey you may not luck out with some but if you be aggresive, believe in your ability and do the right research, you will end up minting money, literally!!
I am going to put almost 80% of my 2009 contribution come January2nd. I will definetly grab some more commodity (POT, MOS, RTP, COP, DVN, MT, NUE) & financials (WFC, JPM, BAC, C, GS) stocks if they maintain the current value!
I hear still_to_register. With market down like this, I am also thinking about “maxing” out roth for 2009 in January, provided I have money at that point. If I can’t, I’ll just contribute regularly, as rupneu1 said, “in the long-term it all averages out”.
You’ve got quite a few companies in your portofolio still_to_register, must keep you busy! Did you get it on C when it was around 3 or 4?
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