How do I invest for retirement?

There are a lot of thoughts on this topic and I put a link in the third part of our guide on different options for portfolios you can choose to mimic.

There are so many options when deciding to invest, but essentially you can “lump sum invest” where you invest a big chunk of money at one point in time, or you can “dollar cost average” where you take that lump sum, divide it over a period of time (i.e. monthly, quarterly, annually), and invest at regular intervals.

Personally, we dollar cost average. We do this because its easier and it takes away the difficulty of trying to time the market.

So, what is an example of us dollar cost averaging?

We can contribute $6,000 to each of our Roth IRAs annually. Again, a Roth IRA is a great financial move in residency because money contributed is post tax, and in residency we pay lower taxes then we will as an attendings.

I know I want to max out my Roth IRA, but I don’t want to just invest all $6,000 at one time by “lump sum investing”. So instead, I contribute $500 a month to each of our Roth IRAs and buy VTI (Vanguard Total Index Fund).

This month we both bought 3 VTI for each of our Roth IRAs. Essentially, after the money is transferred to our investment account, I just put the order in and buy 3 VTI each.

Do I care what the price is compared to last Monday? Nope! I’m in residency learning about eyes, I don’t need to be a day trader. Besides, what is most important for investing in the long run? 1) saving money and 2) staying invested over the long term so compound interest takes hold.

Hope that helps! Do you like the idea of dollar cost averaging or lump sum investing and why?  

https://www.fool.com/investing/dollar-cost-averaging-what-investors-need-to-know.aspx