Suzy is excited to deploy her first corporate bonus but scared to invest everything in a lump sum. Should she stick with what’s worked in the past and just dollar cost-average?
Meghan doesn’t understand how stock pricing affects capital appreciation. Is it always better to buy when share prices are low?
Robert was recently released from prison and wants to start his life on the right foot. What’s Joe and Paula’s advice for him?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Suzy asks (at 04:23 minutes): I’m about to get my first large corporate bonus. Should I invest the lump sum or dollar cost average into the market?
I’ve been a slow and steady saver for my entire career, and thanks to dollar cost averaging, I’m in good financial shape for retirement.
I’m on track to max out my 401k, HSA, and SEP IRA for the year, so the bulk of the money will be put into a post-tax investment account.
Letting the money sit in a savings account for a long while doesn’t appeal to me. On the other hand, dollar cost averaging over a shorter window doesn’t feel like dollar cost averaging at all.
How should I think through this?
Meghan asks (at 22:33 minutes): How do the number of shares and the price per share of a stock relate to capital appreciation and compounding?
With all things being equal, is it better to invest in an index fund whose shares are cheaper than in an index fund whose shares are more expensive?
Say I have two different index funds that track the total stock market. If one fund’s shares cost $200 and the other costs $100, is it better to buy the fund with the cheaper shares?
It seems it’d be the same because the returns would grow as a percentage, but I’m wondering if there’s something else to consider.
Robert asks (at 41:10 minutes): I’m 24 years old and recently released from prison. I want to move out of my mom’s house within a year.
Once I start working, I plan to save $510 a week. I also want to start investing in index funds after I meet my savings goals.
I want to get into real estate eventually, possibly buying foreclosed properties to get started. But first I need to get my life on track.
What’s your advice for recently released or current inmates who listen to this podcast? More importantly, what’s your advice for me to get my life started?
Resources Mentioned:
Work Opportunity Tax Credit | Internal Revenue Service (irs.gov) | Website
About | U.S. Department of Labor (dol.gov) | Website
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