Can you time the market?

I think yes, in some cases you can.  I have read articles saying “if you have savings and want to invest, no time like the present!  Don’t bother trying to time the market.” Well I beg to differ!

I have a tidy sum near $4k lying around in the stupidest money vessel of all time: the Rollover IRA.  When I joined my current job, I rolled my previous employer’s 401k into a “Rollover IRA.”  This is where you must first send a Rollover distribution until you finalize your rollover into a Roth IRA.  Transferring a 401k to a Roth IRA requires you to pay income tax at the time of the transfer.  And I don’t remember the details, but there is a penalty attached to having that sum removed from the account balance.  You preferably need to have your 25% or whatever amount ready to roll in cash money.

Well I did not have $1000 lying around, because I was dealing with my costly dental problems at the time.  And having just joined my continuously more and more intense job, I was unsure of my job security.  I felt I needed at least 6-12 months at the job before raising large sums only to toss them around.  So my money started sitting in this cold, hard, non-interest-accruing vault.

And I cannot believe it, but that nearly $4k is still lying there 5 years later.  At the same annoying balance as when I put it in there in 2009.  So needless to say, it is frustrating to think back on the earnings I could have made if I had completed the transaction to Roth IRA.  I probably would have made back the $1k tax money and maybe even more already. Arghh!

Despite my regrets over my past money management, I don’t think I should just jump into the stock market because “it’s my time.”  I don’t claim to be a stock market wizard capable of knowing the perfect day to deposit money for maximum return.  But I do know that during an all time historical stock market high is probably not the right time for me to throw money in.  With pending tapering of bond buying, the current market seems more likely to go down at this point (given that its overall historical trend has always been up).

So when would I put in my Benjamins?  I would be comfortable dropping my money in if the Dow Jones falls to 1000 points less than its value today.  At 15,500, I think the DJ could pretty easily rebound back to the current value of 16,500.  And with that increase, it would make a respectable 6% return coming back to 16,500.

This is pretty cool overall – if the market continues to float like it is now, that would be great for my existing 401k, and I might look into diverting the Rollover money to help support my upcoming real estate investment plans.  Despite the additional 10% withdrawal penalty, that is my current plan for this money if the market stays high.  I believe real estate has the potential to give much greater ROI than even a decently timed stock market entry.  But should the market dip below 15,500, I will put that money in the market via Roth IRA.  With no regrets!

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