I put $5500 into my roth IRA this year - but have not invested it into a stock.

Last year I invested into a vanguard fund and it has done pretty well for me.

This year I like this other vanguard fund (vgsix) and want to buy it but waiting for a market pull back.

Is this a good strategy? I just think the market is over bought and i'm waiting for a drop. Any one have any advice on when to buy mutual funds for your retirement?

I'm also DRIP the dividends. I think this is pretty standard for ROTHS

I think the best strategy would be to invest the cash now if you are saving for a far off retirement. Nobody knows when the next market pullback will be. Check out the bogleheads forum and their wiki for a more detailed passive buy and hold index strategy. https://www.bogleheads.org/

I've thought the market has been too high since somewhere around 2009-2010. Luckily I didn't try to time the market. If you have no special reason why you are smarter than the average investor, just invest the money asap, IMO.

Time in the market beats timing the market for all but a few people.

First, you should have a well-balanced portfolio. I would be very wary of picking a different individual fund each year, like this REIT fund. 99% of people are best off by selecting an appropriate target date fund and putting all their retirement money into that.

Second, as others have said, timing the market works out for almost no one. If it makes you sleep better, then dollar cost average the money in over the next 4-6 months.

Near term there's nothing wrong with staying on the sideline. Those people who chastise him for that are ridiculous. But at some point, yes, there may be opportunity cost associated with staying in a money market especially in a broad bull market.

My sense for you would be to identify which index funds you are looking to enter while you stay on the sideline. Check out vbiax, which has a mix of bonds and equities or vti, which is pure equities. You can also invest in targeted retirement date funds, which are drawn from various indexes such as vti and vbiax.


Don't listen to those people who believe you always have to be fully exposed. It's a bunch of horse**** imo. If you plan on staying on the sideline for a few months, there's nothing wrong. Many years, you ought to re-evaluate your general retirement strategy WRT investing in a Roth.

poor logic ITT... don't tell a novice that sitting on the sidelines is OK (without any reason whatsoever..)

OP should be fully invested 100% the rest of his life. That money should be invested at an appropriate allocation of cash/bonds/stocks.

my bonds are earning 4% a year but about to mature. I don't think I can get that kind of GTD return anywhere these days.

I like high yield stocks that are safe like AT&T

I think mutual funds are best for ROTH's though.

Consider a REIT as they must distribute 90% of income as corporate tax-free dividends. however since it is in a roth it grows tax-free. O and OHI have been mentioned here.

Also although a mutual fund might have a 1% management fee, the true average profit after inflation of stocks might be 5%. Thus your 1% fee is really a 20% management fee. Look for fees around .25% (or 5%).

http://www.dummies.com/how-to/conten...portfolio.html

just put it in vanguard target retirement date with an stock/bond allocation you are comfortable with and continue to max it out. big picture thinking.

Invest it with a financial adviser who will churn your account for you and generate lots of commissions

I feel like this can't be said too many times.

OP, the thing that most people don't realize when they say "the market is overvalued" is that the correction of overvaluation doesn't necessarily lead to lower prices. Let's say that there is some true "fundamental value" for the entire U.S. market right now, and that hypothetical market value is one that is expected to generate future returns that line up with historical equity returns.

Suppose that right now, the U.S. market is valued at 2 times that fundamental value. One possible outcome is that we experience a 50% drop in price. If that happens, of course you'd rather not be invested. But a very possible different outcome is that the market doesn't drop, but simply generates lower than historical returns for the next several years. So we might experience 4-6% average market returns for the next 5-10 years (rather than 8-10% per year) due to the current overvaluation, but stocks are currently priced lower than they are likely to be at any point in the future. In that case, I'm not sure you're happy to be sitting in cash.

My point is that "current overvaluation" isn't a sufficiently good reason to be out of the market. Invest in a Target fund either immediately or over the next few months. If you truly don't expect to need the money for many, many years, doing this and ignoring the volatility is almost certainly the best decision you can make.

Second this. Also don't listen to Steelhouse ever

haha - that's rude but funny.

Any ways guys I invested the full $5500 into VGSIX which is what I wanted to do.

I also like that SWTSX fund - I have pretty much the same exact thing through vanguard - VTSMX - and mine pays a slightly better yield LOL. I've had VTSMX for a long time and have DBLed my money on it - and I DRIPed it.

I just have a house of cards mentality towards the over all US financial system. But I suppose if it collapses we are all screwed and it's not like I wanna start hoarding canned goods and gold LOL.

You got some really good advice in this thread - You cannot time the market, be fully invested until your retirement in a diversified low-fee portfolio.

You ignored that advice and then made an investment that will do really poorly if your 'house of cards' prediction actually becomes true. Look at the historical performance of VGSIX during the financial crisis. It lost ~75 % (!!!!!) of its value from high to low between 2007 and 2009. It actually didn't get back to its 2007 highs until just this year.

Not sure why you bothered asking for advice when you had already made up your mind.

which vanguard fund would you of gotten? I like my choice but there could of been a better one.

standard 2p2 advice thread outcome

I'm with brendoh.

Laughable yet standard outcome, really this thread should be printed out and distributed to every prospective investor in the world imo.


This idea that you need to be invested 100% of the time is a ****ing awful and nefarious myth that is perpetuated by people who benefit greatly whether or not your portfolio + or -'s. You should invest when there is a confluence of appropriate risk/reward ratios that fit your overall strategy and outlook, period.

If I move my roth IRA to a MMF for 3-6 months once every 5-10 years, I am not missing out on anything.

There's no doubt that the overall market has been +25 and -5 for the last 30 years. So the best fool proof, brain dead, monkey strategy is to invest 100% and forget it, but that is not an excuse, or evidence that should be used to perpetuate the dogma of always being fully invested into the market 100%.

A Vanguard Target Retirement Fund is a very solid vehicle for your IRA funds. Extremely low cost, reasonably diversified. Max it out each year, ignore peaks/valleys, and you're very likely to have plenty to live off of when you retire.

I honestly don't understand your post. I guess if you pick the 'right' 3-6 months every 5-10 years - sure, you win! But no one knows when those periods are going to be when you're looking into the future. Look at a graph of the S&P since 2009 and see how easy it would of been to pull out for 3 months only to have to sit out several years of the rally because markets have only recovered strongly from every pullback and stocks would cost more then when you sold them for your 'break'.

BTW with 85% of professional active managers underperforming their benchmarks, why do you think you would have any edge timing your 'breaks'?

As far as Vanguard - they have very little to gain if you're in a MMF or a target retirement fund, the expense ratios are actually quite close. So your logic fails here as well.

Do you play poker hands preflop based on gut feelings of hitting or missing flops?


"This idea that you need to be invested 100% of the time is a ****ing awful and nefarious..." <---- GIVE YOUR REASONS WHY?

...unless you think your conspiracy drivel counts... "perpetuated by people who benefit greatly whether or not your portfolio + or -'s."

Like random people on the 2p2 BFI forum trying to help a novice investor?...

That dogma was borne out of an era when corporate equity:gdp was far more favorable for buy and hold. It simply is no longer applicable in today's environment.

and instead of entering long us bonds and consumer staples (obviously given his strategy and outlook), he went into REIT

the advice so strong in this thread he still went in the right direction guise!

So you're saying its wrong for me move my roth ira into x% MMF while i move into long US bonds instead of VTI/sp500/Russell

and for the record, I started investing into my roth in 2009 and have been about 80% stock 20% bonds up until 2015.

Aggo, you are assuming that you (or whoever) will pick the right times to be in and out of the market.

It is unlikely that you (or whoever) have the specific skills and knowledge to do so with sufficient consistency to make it a wise choice. This isn't specific to you; just a statement about 99%+ of people.

i'm looking at VFIFX - 2050 retirement fund - and it looks pretty good

I may get that for 2015

Why not transfer into the target retirement fund right now? No need to be stuck with past (arguably worse) decisions, especially in no-tax, no-fee Vanguard Roth IRA land.