[Elizabeth]

In 2020 I got scared and pulled my money from the stock market (VTSAX) and put it in the Vanguard money market account, and I think I am ready to put it back in again (Be kind, please! I already know that I lost out on market growth and that it was foolish to pull the money out).

I have 2 questions:

1. Does it matter if I put it in VTI instead of VTSAX (I know it I won’t have the automated investment option, but I like that investments can be added in any amount and it has a .03% expense ratio instead of .04%)
2. Since I am investing for 10+ years before withdrawing, is it okay if I just throw it all into the total market this week vs. doing it over a period of months?

[Matt]

Go VTI for better usage of your funds, fractional shares, etc. “Time in the market” (lump sum) is mathematically better than dollar cost averaging… but, if you need a mental crutch, you could commit to put the same amount of $ into VTI every Tuesday (or whatever day) at noon (nevermind the price) over a period of 2 months to get some averaging but at least be in the market soon, versus freaking (as you seem to have done earlier) about going “all in” at once.

[Joe]

Wait a little longer. Everything is going down. Look at Japan bonds for the future.

[Sean]

Either VTI or VTSAX is fine. But if you’re at vanguard you won’t be able to automate future investments into VTI, so if that’s part of your plan, VTSAX will be better.

Yes, you should invest it all at once.

For your own knowledge and to prevent the mistake in the future have you calculated how much money you lost by trying to time the market? Might be a worthwhile endeavor to do it and write it down somewhere for next time you get scared and want to pull out of the market.

That could easily have been a quarter million dollar difference depending on when you sold. And I’m not saying that to be mean, it’s just something I think would be worth you know as I said so anytime in the future you can pull out your note and say last time I thought I knew the future I lost 250k or whatever number.

Also, obviously stop looking at the market so much. I pretty much only know what the market has done if I see someone complaining on FB.

Don’t miss: Should I change the contribution to the VTSAX or keep it in the target retirement fund?

[Christopher]

VTI also transfers to other brokerages if you choose to move in the future.

Lump sum tends to be better a small majority of the time over dollar cost averaging, but if doing it over a period of time helps you feel less worried then that’s fine too.

Explore these too: I know both are practically the same fund, but: VTI or VTSAX in a Roth IRA & why?

[Joe]

Don’t beat yourself up about…I did as well and regret it but I’m taking the stance now that I’m fully back in that I have to learn from it and stay the course in the future and reflect back on this as a mistake.

[Mark]

hope u learned ur lession. lump sum historically is better than averaging in. but can your emotions handle it if there is a drop. VTI or VTSAX. either is fine. they’re literally the same. dump it, forget about it, don’t look at ur account, and don’t check the market everyday. uve already learned that making investment decisions based on emotions and not fact is a terrible idea. if you know you are emotional, then do create habits that will make u not act on ur emotion.

[Harry]

I think you’re confused, investments into VTSAX can be made in any amount after the initial $3000. VTI requires the purchase of whole shares through Vanguard..01% is negligible, on a $1,000,000, it’s $100.

[Edward]

I would encourage you to average in. Lump sums historically work best at the beginning of a calendar year. September/October are historically the weakest months for stocks. Literally every year. You will likely get better buying opportunities in the not too distant future, so put some to work now, put more to work later. If you dump it all at once, a small pullback could easily scare you away again. If a pullback doesn’t happen, at least you already put some money to work at lower levels. This is called pyramiding.

So, maybe deploy some cash in Aug, some more in Sept, and the rest in Oct. Maybe schedule it with conditional orders to take the emotion out. Otherwise you’ll need to have the courage to buy into whatever headlines are causing price to fall. Buying into fear is a learned skill because it contradicts your natural instincts. Just have to remember that this too shall pass…every downtrend ends in an uptrend (and vice versa).

[Author]

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