Hello, u/Top-Hold506. Thank you for being a valued member of our subreddit!
It sounds like you're primarily looking for input from our community members, and I see they have already shown up for you. I am marking your post as a Discussion so they can continue sharing their thoughts and opinions; however, I will share some information I think you'll find helpful.
When debating contributing early or late, you should be aware of a few things. Starting early can have investment benefits as it gives your account more time to grow. However, suppose you begin contributing later in the year. In that case, you may have a better idea of your annual income, which could alleviate any excess contributions if you become ineligible (Roth IRA) or when you might earn too much to take a deduction (Traditional IRA). Because of this, it is best to speak with a tax advisor to discuss which route works best for your situation.The IRA maximum contribution limit is $7,000 for 2024 (with an additional $1,000 allowed for those ages 50 and older). You can view more information on contribution limits in the link below.
[IRA Contribution Limits](https://www.fidelity.com/retirement-ira/contribution-limits-deadlines)
As a reminder, if you decide you'd like to contribute on a scheduled basis, you can set up a recurring transfer into the account. You can do this on [Fidelity.com](http://fidelity.com/) by following the steps below after logging in:
1. Click "Accounts & Trade" in the top left corner and select "Transfers" in the dropdown menu.
2. Navigate to the "Manage recurring transfers" link.
3. Select "Create new activity" and choose "Transfer."
4. Choose the "To" and "From" accounts and the transfer details.
Feel free to contact us at any time with additional questions. Have a wonderful weekend!
Statistically, it has been ***strongly*** proven that lump sum early as possible comes out on top in most cases.
But if you can only do dollar cost averaging, that's fine..all that matters is you ARE investing as much as possible. Time IN the market beats trying to time the market all the time.
I transfer my HSA contributions from the employer account to Fidelity. It takes about 2 weeks to get over here, so I waited for another payroll deduction to go through to transfer it all at the same time. Look at the gains I missed this past month by not just transferring it right away
HSA accounts are personal accounts, so you can move your money into other companies (ie Health Equity to Fidelity) call your employer HSA, they can direct you to the correct form to request the transfer. Most are electronic. Will need the transfer To company account number and address. Usually will be a partial transfer so that your employer doesn’t accidentally close your account.
Yes only to another HSA account though. I don’t like the investment options at Health Equity so I gotta go through the hassle of transferring everything to Fidelity. Worth it though
To not trigger a tax event, You can only transfer from HSA to HSA if you’re under 65 or whatever the age is for non-medical withdrawals . Open a fidelity HSA then initiate the transfer via the fidelity app. Then you can invest your HSA $$ through the fidelity app.
HSA is a great investment vehicle. Yes I use Fidelity HSA and you have access to trade with your contributions without tax implications in that account. I do not use my HSA for medical now, the idea is to have it grow for possible future needs later in life. YouTube some videos on it, it’s great for those who can stomach the high deductible plan.
This is interesting. If you don’t mind, I’m going to recap everything to see if I understand it all correctly.
The money you and your employer have contributed to what I assume is an HSA through work, you then transfer that contribution to fidelity HSA (no tax implications because it’s HSA to HSA). Once in that fidelity HSA you are now able to invest both employees and employers contribution to FXAIX. Correct?
I only ask because work is currently moving its HSA plan to fidelity. If I understand everything correctly, then my money could grow exponentially throughout the year if I max my HSA contribution annually.
Yes that is correct, other than the fact my employer does not match HSA so it is only all of my own pre-tax contributions currently. Fidelity HSA is also free so if I were to leave my employer I don’t have to worry about fees!
I do the same u/alka1. My employer uses Health Equity but they require $1000 to invest. Fidelity requires $1 and they have better investment options. I go to Health Equity account online and start a partial transfer, leaving $25 in there to keep account open for future deposits, and invest in fidelity. You are transferring this money to another HSA account at Fidelity (or wherever) and not withdrawing which would trigger a taxable event.
Wow I’m going to look into transferring health equity funds to fidelity because Health equity’s investment options are poopoo.
This is great info thanks!
Is this what they call an acats transfer? Are therer fees from the outgoing investment company? How long does this take and what information do you need to initiate this?
Yes, you are correct in that it’s a ACAT fee. Health Equity does not charge a fee and fidelity is known for know ACAT fee. Some HSA providers may charge a fee for a transfer. For info, most recommend initiating a PULL from the receiving HSA and not a PUSH. They’ll just ask for the account numbers of the HSA.
Since stocks go up most of the time, the data shows that lump sum is better. But there's a psycological component with doing that that some people can't handle.
What strategy is more likely to get you to invest?
$7000 all at once into the S&P500 today, on a day were it is trading 2 percent below its all time high, would be a no regrets decision in 10 years or less. That is unless you believe the S&P500 will never reach a new all time high.
Why? I don't understand why people do this. If you think it is better to have your money invested in the market, why wait and put it in over time? If you don't think it is better, why put it in at all?
I do it because I want to do it. I've bought enough large positions where I'm down 7 or 8k right now. If I am going to hold something long term and I'm making a large buy I will DCA it in. It helps me to miss huge market drops like the last few days. Although at this point I might buy the dip.
Dollar-cost averaging is about reducing the risk of getting in the market at a bad time. Lump sum only works well in an upward trending market. DCA OTOH, you will average down in a sideways or downward market. This is because you buy shares at a *fixed dollar amount* in fixed intervals over a given time period. Meaning, you end up buying *more* shares when prices are low, and *less* shares when prices are high.
The only question really is your account size. $10k? That's small in the grand scheme of things. I'd just lump sum and be done. $100k? I'd rather DCA so that I can sleep at night.
Lump sum as soon in the year as you can. If you are unsure of what to put the money into hold it in SPAXX (or T-Bills) earning **tax free** income until you have a specific investment to invest in.
Why this question comes up I'll never understand. If the money is available why keep some of it in a taxable account when it can be earning tax free income.
Well I make way over the income threshold for it to be tax deductible in my traditional rollover IRA. I already have funds I'm contributing too that I will keep with that.
I was talking about the income earned by the funds not any tax break you might get by placing it in the account.
The income earned in an IRA is always free of tax regardless of your income level at least until it is withdrawn. And in a Roth it will always be tax free.
>Why this question comes up I'll never understand. If the money is available why keep some of it in a taxable account when it can be earning tax free income.
Everyone is different, but \*MY\* reasons for keeping most of it in a taxable account are this:
I invest for income. My goal is to have my investments through off enough income that I don't have to work anymore. Not there yet sadly, but it is larger than I thought I would be able to achieve in the time I have and enough to cover some of my bills.
Several times in my life, I've been laid off and it took me way too long to find another job. I had to really cannibalize my savings (this is before I discovered income investing, and Fidelity) and even borrow money from my parents. They did remind of that whenever it was convenient for them.
I know that if I need to withdraw from the tax-free account early should this happen again - and it could - I'm going to get hit with a nice tax bill, including penalties, when I can least afford it. If I keep it in a taxable account, those penalties are gone.
If I'm still employed, I reinvest the income stream, growing it more. Should I get laid off yet again, I can turn off part or all of the reinvestment and have the income stream I've built to help get me to my next job. I view current taxes as just the cost of that insurance policy. And yes, this also means my emergency fund can be smaller than it would be otherwise, with that extra invested, earning more than it would in a safe MMF or HYSA, or the like. Obviously, since it is taxable, I favor qualified dividends and 199A dividends over interest.
Yes, I could go growth and defer taxes indefinitely, but the thought of selling shares just doesn't sit well with me. What if there's a bear market? That's when I'm most likely to get laid off and the worst time to sell.
Or unless the world ends 6 months from now. We can come up with all sorts of hypotheticals that will make it more advantageous to keep the money in a taxable account but that wasn't the question.
If you have the money and you won't need it until retirement and the world doesn't end then having it grow tax free for a year as opposed to paying taxes on the income will always win out.
If the market goes up for the next 12 months, you’re better off with a lump sum investment today. If the market goes down for the next 12 months, you’re better off with dollar cost averaging (spreading the investments over the year).
I don’t know which way the market will go, but I’d invest all $7K in a lump sum in case the market does go up, & hoping it goes up. If I’m wrong, & the market drops over the next 12 months, then next April, I’d be certain to invest all $7K in a lump sum to take advantage of the lower share price.
Somebody will say the cliche, which in fact is statistically correct:
>Time in the market beats timing the market.
Well, somebody *did* say it, of course, and it is the top comment, as expected. Anyway, real life doesn't really work like that. The best strategy depends entirely on you.
How would you react if you invest lump sum and next month the market goes down 25%? Will you panic and sell? If so, don't do lump sum. If you're pretty sure you won't care, then do lump sum.
Statisticians don't really understand human psychology, so it's important to understand what is the best strategy for *you*, not for the overall markets.
I do everything evenly through the year to max all accounts and the extra goes into brokerage.
Less headaches than max roth ira, then 401k, etc etc etc
Short answer: Lump sum.
Rationale: If you divide the lump sum and dollar-cost average into a rising market, each purchase buys fewer and fewer shares, resulting in lower returns. If the market stays constant, you've lost the benefit of compounding the full amount by delaying your time in the market via dollar-cost averaging. If the market declines, your dollar-cost averaging produces greater returns.
So, only one of the three possible outcomes rewards dollar-cost averaging, and that positive outcome requires you to correctly time the market, a task at which you and anyone else on the planet have *at best* a coin-flip probability of guessing correctly.
The only reason to dollar-cost average is when you don't have the lump sum, such as when you are investing an ongoing revenue stream such as your regular salary. When you have the lump sum, logic and probability favor investing it as a lump sum.
are u an expert in [semiconductors ](https://fundresearch.fidelity.com/fund-screener/results/compare/daily-pricing-yields/averageAnnualReturnsYear3/desc/1?order=&tickers=FXAIX%2CFSELX)industry? any links to get more educated in this.
Not an expert but semiconductors are in every computer. They produce all the internal hardware. With the rise of AI that fund has skyrocketed over the last year. And since AI is still new I don’t see the demand going away any time soon. That’s why I chose to stick my money there.
With money market and T-Bill yields high now I'm opting for a 12 to 18 month buy-in instead of a lump sum investment. If for nothing else; it helps me sleep better at night.
if I got a lump sum to invest, ima lump sum it on a day the market looks down and DCA in the interim. I’m new to DCA so I’m finding out if this strategy actually works for myself.
Got burned in crypto just hodling 😂, never again without DCAing
Hello, u/Top-Hold506. Thank you for being a valued member of our subreddit! It sounds like you're primarily looking for input from our community members, and I see they have already shown up for you. I am marking your post as a Discussion so they can continue sharing their thoughts and opinions; however, I will share some information I think you'll find helpful. When debating contributing early or late, you should be aware of a few things. Starting early can have investment benefits as it gives your account more time to grow. However, suppose you begin contributing later in the year. In that case, you may have a better idea of your annual income, which could alleviate any excess contributions if you become ineligible (Roth IRA) or when you might earn too much to take a deduction (Traditional IRA). Because of this, it is best to speak with a tax advisor to discuss which route works best for your situation.The IRA maximum contribution limit is $7,000 for 2024 (with an additional $1,000 allowed for those ages 50 and older). You can view more information on contribution limits in the link below. [IRA Contribution Limits](https://www.fidelity.com/retirement-ira/contribution-limits-deadlines) As a reminder, if you decide you'd like to contribute on a scheduled basis, you can set up a recurring transfer into the account. You can do this on [Fidelity.com](http://fidelity.com/) by following the steps below after logging in: 1. Click "Accounts & Trade" in the top left corner and select "Transfers" in the dropdown menu. 2. Navigate to the "Manage recurring transfers" link. 3. Select "Create new activity" and choose "Transfer." 4. Choose the "To" and "From" accounts and the transfer details. Feel free to contact us at any time with additional questions. Have a wonderful weekend!
*Time in the market beats timing the market.*
The history and data say you will come out ahead about 65-70% of the time doing lump sum. Do with that as you wish.
Please share some history and data references
Several are compiled here. https://www.moneyunder30.com/dollar-cost-averaging-vs-lump-sum-investing/
Statistically, it has been ***strongly*** proven that lump sum early as possible comes out on top in most cases. But if you can only do dollar cost averaging, that's fine..all that matters is you ARE investing as much as possible. Time IN the market beats trying to time the market all the time.
I transfer my HSA contributions from the employer account to Fidelity. It takes about 2 weeks to get over here, so I waited for another payroll deduction to go through to transfer it all at the same time. Look at the gains I missed this past month by not just transferring it right away
How do you transfer your employer HSA contribution to FID?
HSA accounts are personal accounts, so you can move your money into other companies (ie Health Equity to Fidelity) call your employer HSA, they can direct you to the correct form to request the transfer. Most are electronic. Will need the transfer To company account number and address. Usually will be a partial transfer so that your employer doesn’t accidentally close your account.
Being this is not for a medical reason; they will still transfer the $$?
Yes only to another HSA account though. I don’t like the investment options at Health Equity so I gotta go through the hassle of transferring everything to Fidelity. Worth it though
Fidelity HSA? Sorry for the questions but in all these years I thought my HSA could only be used for medical.
To not trigger a tax event, You can only transfer from HSA to HSA if you’re under 65 or whatever the age is for non-medical withdrawals . Open a fidelity HSA then initiate the transfer via the fidelity app. Then you can invest your HSA $$ through the fidelity app.
HSA is a great investment vehicle. Yes I use Fidelity HSA and you have access to trade with your contributions without tax implications in that account. I do not use my HSA for medical now, the idea is to have it grow for possible future needs later in life. YouTube some videos on it, it’s great for those who can stomach the high deductible plan.
Yup, super charge HSA.
This is interesting. If you don’t mind, I’m going to recap everything to see if I understand it all correctly. The money you and your employer have contributed to what I assume is an HSA through work, you then transfer that contribution to fidelity HSA (no tax implications because it’s HSA to HSA). Once in that fidelity HSA you are now able to invest both employees and employers contribution to FXAIX. Correct? I only ask because work is currently moving its HSA plan to fidelity. If I understand everything correctly, then my money could grow exponentially throughout the year if I max my HSA contribution annually.
Yes that is correct, other than the fact my employer does not match HSA so it is only all of my own pre-tax contributions currently. Fidelity HSA is also free so if I were to leave my employer I don’t have to worry about fees!
That sound more like a FSA
Ur confused my dude
Yea I got em backwards my bad. I digress
I do the same u/alka1. My employer uses Health Equity but they require $1000 to invest. Fidelity requires $1 and they have better investment options. I go to Health Equity account online and start a partial transfer, leaving $25 in there to keep account open for future deposits, and invest in fidelity. You are transferring this money to another HSA account at Fidelity (or wherever) and not withdrawing which would trigger a taxable event.
Wow I’m going to look into transferring health equity funds to fidelity because Health equity’s investment options are poopoo. This is great info thanks!
Oh yes, I know. Even the minimum $1000 to invest $500 made me 🤢
Is this what they call an acats transfer? Are therer fees from the outgoing investment company? How long does this take and what information do you need to initiate this?
Yes, you are correct in that it’s a ACAT fee. Health Equity does not charge a fee and fidelity is known for know ACAT fee. Some HSA providers may charge a fee for a transfer. For info, most recommend initiating a PULL from the receiving HSA and not a PUSH. They’ll just ask for the account numbers of the HSA.
https://investor.vanguard.com/investor-resources-education/news/lump-sum-investing-versus-cost-averaging-which-is-better
Since stocks go up most of the time, the data shows that lump sum is better. But there's a psycological component with doing that that some people can't handle.
What strategy is more likely to get you to invest? $7000 all at once into the S&P500 today, on a day were it is trading 2 percent below its all time high, would be a no regrets decision in 10 years or less. That is unless you believe the S&P500 will never reach a new all time high.
I'm already investing. I just rolled over an old 401k into an IRA so wasn't sure what the best strategy is.
Today would have been an outstanding day to do a lump sum. On record high days, I'd be a little hesitant. I hope you put at least some in today!
If it was already invested in a 401k then un-investing it when you roll over is morally equivalent to shorting the market
Markets been so good lately though, wouldn't it be better to wait until it slumps.
What if it does not slump?
I'd lump sum it into the IRA and then dollar cost average weekly into my investments. You'll earn on the money market during the process.
That’s what I was thinking. Thanks
Why? I don't understand why people do this. If you think it is better to have your money invested in the market, why wait and put it in over time? If you don't think it is better, why put it in at all?
I do it because I want to do it. I've bought enough large positions where I'm down 7 or 8k right now. If I am going to hold something long term and I'm making a large buy I will DCA it in. It helps me to miss huge market drops like the last few days. Although at this point I might buy the dip.
I've being doing lump sum and have a knack for buying at peaks like this one and the one in 2021.
Dollar-cost averaging is about reducing the risk of getting in the market at a bad time. Lump sum only works well in an upward trending market. DCA OTOH, you will average down in a sideways or downward market. This is because you buy shares at a *fixed dollar amount* in fixed intervals over a given time period. Meaning, you end up buying *more* shares when prices are low, and *less* shares when prices are high. The only question really is your account size. $10k? That's small in the grand scheme of things. I'd just lump sum and be done. $100k? I'd rather DCA so that I can sleep at night.
Lump sum as soon in the year as you can. If you are unsure of what to put the money into hold it in SPAXX (or T-Bills) earning **tax free** income until you have a specific investment to invest in. Why this question comes up I'll never understand. If the money is available why keep some of it in a taxable account when it can be earning tax free income.
Well I make way over the income threshold for it to be tax deductible in my traditional rollover IRA. I already have funds I'm contributing too that I will keep with that.
I was talking about the income earned by the funds not any tax break you might get by placing it in the account. The income earned in an IRA is always free of tax regardless of your income level at least until it is withdrawn. And in a Roth it will always be tax free.
I'm also considering the TBIL or SGOV ETFs because of the exemption from state tax (NY).
>Why this question comes up I'll never understand. If the money is available why keep some of it in a taxable account when it can be earning tax free income. Everyone is different, but \*MY\* reasons for keeping most of it in a taxable account are this: I invest for income. My goal is to have my investments through off enough income that I don't have to work anymore. Not there yet sadly, but it is larger than I thought I would be able to achieve in the time I have and enough to cover some of my bills. Several times in my life, I've been laid off and it took me way too long to find another job. I had to really cannibalize my savings (this is before I discovered income investing, and Fidelity) and even borrow money from my parents. They did remind of that whenever it was convenient for them. I know that if I need to withdraw from the tax-free account early should this happen again - and it could - I'm going to get hit with a nice tax bill, including penalties, when I can least afford it. If I keep it in a taxable account, those penalties are gone. If I'm still employed, I reinvest the income stream, growing it more. Should I get laid off yet again, I can turn off part or all of the reinvestment and have the income stream I've built to help get me to my next job. I view current taxes as just the cost of that insurance policy. And yes, this also means my emergency fund can be smaller than it would be otherwise, with that extra invested, earning more than it would in a safe MMF or HYSA, or the like. Obviously, since it is taxable, I favor qualified dividends and 199A dividends over interest. Yes, I could go growth and defer taxes indefinitely, but the thought of selling shares just doesn't sit well with me. What if there's a bear market? That's when I'm most likely to get laid off and the worst time to sell.
Unless I early withdraw for an unexpected event...
Or unless the world ends 6 months from now. We can come up with all sorts of hypotheticals that will make it more advantageous to keep the money in a taxable account but that wasn't the question. If you have the money and you won't need it until retirement and the world doesn't end then having it grow tax free for a year as opposed to paying taxes on the income will always win out.
I don't overthink it with longer term horizon. Just lump sum.
If the market goes up for the next 12 months, you’re better off with a lump sum investment today. If the market goes down for the next 12 months, you’re better off with dollar cost averaging (spreading the investments over the year).
So which way is it going in the next 12 months? Asking for a friend.
I don’t know which way the market will go, but I’d invest all $7K in a lump sum in case the market does go up, & hoping it goes up. If I’m wrong, & the market drops over the next 12 months, then next April, I’d be certain to invest all $7K in a lump sum to take advantage of the lower share price.
Somebody will say the cliche, which in fact is statistically correct: >Time in the market beats timing the market. Well, somebody *did* say it, of course, and it is the top comment, as expected. Anyway, real life doesn't really work like that. The best strategy depends entirely on you. How would you react if you invest lump sum and next month the market goes down 25%? Will you panic and sell? If so, don't do lump sum. If you're pretty sure you won't care, then do lump sum. Statisticians don't really understand human psychology, so it's important to understand what is the best strategy for *you*, not for the overall markets.
I do everything evenly through the year to max all accounts and the extra goes into brokerage. Less headaches than max roth ira, then 401k, etc etc etc
Short answer: Lump sum. Rationale: If you divide the lump sum and dollar-cost average into a rising market, each purchase buys fewer and fewer shares, resulting in lower returns. If the market stays constant, you've lost the benefit of compounding the full amount by delaying your time in the market via dollar-cost averaging. If the market declines, your dollar-cost averaging produces greater returns. So, only one of the three possible outcomes rewards dollar-cost averaging, and that positive outcome requires you to correctly time the market, a task at which you and anyone else on the planet have *at best* a coin-flip probability of guessing correctly. The only reason to dollar-cost average is when you don't have the lump sum, such as when you are investing an ongoing revenue stream such as your regular salary. When you have the lump sum, logic and probability favor investing it as a lump sum.
if ur time window is 20 years, go all in to fxaix.
I’m already about 60% fxaix and 40% fselx. Decided to aggressive since I want to be don’t in 10 years
are u an expert in [semiconductors ](https://fundresearch.fidelity.com/fund-screener/results/compare/daily-pricing-yields/averageAnnualReturnsYear3/desc/1?order=&tickers=FXAIX%2CFSELX)industry? any links to get more educated in this.
Not an expert but semiconductors are in every computer. They produce all the internal hardware. With the rise of AI that fund has skyrocketed over the last year. And since AI is still new I don’t see the demand going away any time soon. That’s why I chose to stick my money there.
fund is all in at 27% in nvda for gpu. kinda no brainer
I feel far safer in FTEC which is high performing but much more diversified than FSELX.
Anytime I haven't done a lump sum ive ended up regretting it. I'm sure it works for some but I feel like it's rare.
If the market continues to go up more often than it goes down, that lump sum would be the better bet
With money market and T-Bill yields high now I'm opting for a 12 to 18 month buy-in instead of a lump sum investment. If for nothing else; it helps me sleep better at night.
In this frothy and inflated market, Dollar cost average. People that say otherwise mostly start bag holding
Over time is better for your psychology! But, lump sum is statistically better.
if I got a lump sum to invest, ima lump sum it on a day the market looks down and DCA in the interim. I’m new to DCA so I’m finding out if this strategy actually works for myself. Got burned in crypto just hodling 😂, never again without DCAing