Timing the market with Roth IRAs

You could have some boring funds within your Roth IRA. Like a Money Market Fund that pays about 0.01% interest right now. When you see the imminent collapse, tell me, then transfer money from the ones that will crash into your safe fund that will hold value. So you "take your money out" but don't actually move money out of the Roth IRA.

You can withdraw Roth contributions penalty-free any time.

^ This

Nothing stops you from shifting your investments within the rira to whatever investment you deem to be best. Some funds require you to leave your money parked within in it for a short period to prevent investors from treating investing in mutual funds like day trading. Read your fund's prospectus.

you can transfer funds around your roth without penalty, so your not taking it out of the ROTH, but you can avoid exposure.

you do realize though this type of market timing doesn't work. you can't beat the market. if you do happen to time taking it out in time (you won't), when do you know when to get back in (you won't). if you are asking entry level ?s like this you should not be trying to market time. dollar-cost average and be done. get a low, low load index mutual fund or ETF and sit on it.

Dewer wrote:

You can withdraw Roth contributions penalty-free any time.

not true:

As most investors are well aware of there are several rules that you must abide by when you contribute to a Roth IRA as well as when you conduct a Roth IRA withdrawal. One rule that investors often do not realize is that there is a requirement to own your Roth IRA for five years in order to withdrawal earnings tax free during retirement. But, like always, there are several things to consider avoiding being penalized by the five year rule with Roth IRA withdrawals.

But yeah, if you want to waste your money timing the market just sell stock and keep it in cash in the Roth.

If you want something more systematic and less hunchy take a look at the 200 day moving average rule as written about in "the ivy portfolio"

Can't you withdraw the principle of your Roth IRA at any time? So if you put in $5k, you can take out that $5k at any time but not the interest that is earned on that?

Market timing is a good strategy if you're good at it. But, for most of us, time in the market usually beats timing the market.

br0ski wrote:

Can't you withdraw the principle of your Roth IRA at any time? So if you put in $5k, you can take out that $5k at any time but not the interest that is earned on that?

If you have to ask this question, you have no business handling your own finances and for the love of god, stop participating in discussions about them.

If you don't know the answer to my question, don't respond to it.

lk2as wrote:

br0ski wrote:

Can't you withdraw the principle of your Roth IRA at any time? So if you put in $5k, you can take out that $5k at any time but not the interest that is earned on that?

If you have to ask this question, you have no business handling your own finances and for the love of god, stop participating in discussions about them.

right, and no one should run a step until he has memorized Jack Daniels

Seriously, check out the five year rule.

"An investor can take out the exact amount of his or her Roth IRA contributions at any time, for any reason without having to pay any tax or penalty – with one big caveat. The earnings from your principal cannot normally be withdrawn prior to age 59½ without paying the 10% early withdrawal penalty"

Contributions can be taken out at any time penalty free. The Five year rule applys to earnings on your contributions. So I was correct.

br0ski wrote:

http://www.rothira.com/roth-ira-withdrawal-rules

"An investor can take out the exact amount of his or her Roth IRA contributions at any time, for any reason without having to pay any tax or penalty – with one big caveat. The earnings from your principal cannot normally be withdrawn prior to age 59½ without paying the 10% early withdrawal penalty"

Contributions can be taken out at any time penalty free. The Five year rule applys to earnings on your contributions. So I was correct.

it looks like I was confused there. ok well.

br0ski wrote:

http://www.rothira.com/roth-ira-withdrawal-rules

"An investor can take out the exact amount of his or her Roth IRA contributions at any time, for any reason without having to pay any tax or penalty – with one big caveat. The earnings from your principal cannot normally be withdrawn prior to age 59½ without paying the 10% early withdrawal penalty"

Contributions can be taken out at any time penalty free. The Five year rule applys to earnings on your contributions. So I was correct.

Thanks for having my back on that.

agip wrote:

br0ski wrote:http://www.rothira.com/roth-ira-withdrawal-rules

"An investor can take out the exact amount of his or her Roth IRA contributions at any time, for any reason without having to pay any tax or penalty – with one big caveat. The earnings from your principal cannot normally be withdrawn prior to age 59½ without paying the 10% early withdrawal penalty"

Contributions can be taken out at any time penalty free. The Five year rule applys to earnings on your contributions. So I was correct.

it looks like I was confused there. ok well.

I give you agip - the only learner on LRC.

Don't try to time the market, you inexperienced moron.

If the full time professional whiz kids with MBAs and PhDs from Harvard et al can't do it, what makes you think you can.

stayed in after March 09 wrote:

Don't try to time the market, you inexperienced moron.

If the full time professional whiz kids with MBAs and PhDs from Harvard et al can't do it, what makes you think you can.

This ^

Well said.

ignoramoose wrote:

Please enlighten me, savvy LRC investors.

I am a young worker who has just started contributing to a Roth IRA.

I know there are penalties for taking funds out before age 59.5, right?

But what about reacting to major market moves?

For example, say it was 2008 and you started to see the upcoming collapse--can you take your money out to preserve the gains, and then put it back in when in March 2009 the Dow was 6000?

It just seems like the rules that you must leave it alone force the average slob to weather the huge downturns of our bubble economy.

1) Dude, the amount of the collapse of that market was not foreseen by anyone except for constant doomsday market people, and that's only because they see it all the time.

2) Invest for your risk tolerance based on age and wimpiness.

3) IF you want to TRY to time the market (you will NOT be able to do it successfully), then continue investing 15% or more into retirement accounts, make sure you have ZERO including a paid for house, and then buy no fewer than 5 stocks. You should aim to split those stocks up into different sectors of the market with no more than about 20% in any one sector. This is money above and beyond the 15% you are still wisely investing in retirement accounts made mostly of mutual funds. Buy and sell to your heart's content with this money.

One EXCELLENT strategy for dealing with a potential market crash is to make sure to retire not only completely debt free with a paid-for house, but also to have 3 YEARS of expenses saved liquid (Cash, MMA, CDs, whatever). The purpose of this money is to not make a lot, but to act as insurance against a stock market crash so that you can still be invested even aggressively in the market. If the market crashes, you live off this money and other income (SS, pensions, etc.) while you wait for the market to come back...because it will. That crash of October 2007 to March 2009 was not that big of a deal for someone like me...I held and continued to buy. Took less than 3 years and even stuff I didn't add to was higher than my October 7 amount. Big freakin' deal.

You can also just move your money into your deposit sweep account without withdrawing it from your RIRA. Probably a lot easier than withdrawing and redepositing your principle.