I rolled over my 401(k) to Vanguard in July. It was super easy to do, but earlier this week, I finally sat down and figured out what I wanted to invest my money in. When I did the transfer, it defaulted to a prime money market fund, which is basically a cash/savings account at 2%. I put a chunk of it in the Vanguard 500 index fund based on this recommendation, but then split some of it out into other index funds. I moved about 20% of it over and I'm going to set-up an automatic exchange every week or two to make it move money over so I can do some dollar-cost averaging. Although, I'm wondering if I do it over such a short period (six months to a year), if it will really matter or not?
When I get home, I do want to start looking at my finances a bit more to see if I can save more money. The longer I date Greg, the more I start thinking that not working (or cutting back) after having kids is a real possibility, so I want to save up as much as possible to prep for that! It's a ways off I'm sure, but saving early is always a good idea!
1 comment:
To answer your own question about dollar cost averaging just look what the stock market has done in the past year (or month). It's more effective over longer periods of course, but you don't want to leave savings drawing low returns in a money market for years just to increase the benefit of your dollar cost averaging - that's cutting off your nose to spite your face. Figure out how you want to invest, and don't take more than a year getting there (though of course you can always change your mind about where you want to go in less than a year).
Of course in retrospect, July to now hasn't been a bad time to have your savings in a money market, but you never know those kinds of things in advance. :)
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