John Bogle doesn’t believe in market timing. Neither do I. But I do believe in timing my habits. The first week of the year is always a week where I make major moves in funding my IRA and outside stock / bond / ETF purchases. The remaining 51 weeks I really don’t pay much attention to the movements in these portfolios. I spend the year worrying about other things.
My first tradition since 2005 is to fully fund my IRA in the first week. I’m income’d out of contributing to a ROTH, so I push the full 5K allowable into my Traditional Ira. For thsoe curious, my IRA is from Vanguard and is rebalanced in the first week to have relatively equal holdings in a Small Cap Index Fund, A Growth Index Fund, an Emerging Markets Index Fund, and a European Index Fund. Why these funds? I’m already well exposed to Domestic Stock in my 401K.
Next, I take 10K and that amount goes into the stock market, to stocks that I happen to like, did my research on, etc. It’s just an arbitrary amount to keep a habit of investing going. This year I added NVidia and Costco to my holdings. For reference, last year’s purchases were Take Two Software and Whole Foods,both outperforming the market in 2008. Yay.
Why do schedule this at this time? As JD Roth and others have stated : you pay yourself first. For me, this is a habit that promotes fiscal fitness. At the start of the year, I immediately think about finances and investment.
As to why I invest…well, there’s a picture of a 40 foot yacht.
The key takeway I’d like to leave is : Automate your finances, pay yourself first, and enjoy the year.