you're listening to Ramsey every day millionaires where we talk retirement building wealth and outrageous generosity

Jeff is with us Jeff's in Salt Lake City. Hi Jeff, how are you? Hey, how you guys doing? Jade, welcome to the show. Thanks a lot Jeff

Jeff. I just wanted to speak for my question just wanted to quickly say thanks Dave so much you know three years ago I was a $90,000

student debt and as of today I am zero dollars in student debt. Whoa, why do go hero? Well done. Just wanted to say wouldn't have done it without you

man I tuned into you during COVID so my question is is there a strategy to to maxing out your Roth IRA? Should I do it January 1st and get it done with and

put it all in maxing out for me in my life at the beginning of the year or is there some strategy of taking more time throughout the year to max that out?

Okay, well the industry teaches a wonderful process called dollar call st averaging that if you when you're steadily investing a little bit every month like in your 401k or

if you set your IRA up to be on a monthly draw then in January the market is down you're buying cheap shares later on you're buying more expensive shares as the market goes up and

goes back down you're buying cheap shares so you get this the average of your dollars across dollar cost averaging and you get to see this wonderful mathematical thing happen that shows your money growing and the other benefit of that is is that it's not emotional at all

because you just plug it in and never change it you always invest now having said that what beats dollar cost averaging is a lump some investment at the beginning of the year the downside of that is it's very emotional because here's the rule here's the

thing about the market is average 11.8% since it started okay so let's say it averages it didn't average here it made 11% and you put in eight thousand dollars at the beginning of the year in

January so you make 8% on 11 now you make 11% on 8 thousand dollars for 12 whole months right right follow me if it runs average and you goal it out one 12th a month through the whole

year you did not make 11% on 8 thousand dollars you made 11% on about 4 thousand dollars right right you follow me so if the market is doing average or up lump sum is the thing the average comes from a place it's the average of the up and the down so you can kind of count on average now however you could put in let's just say I

loud you can put it in and what would it do by the end of the year it could be let it could be worth less right right and so if it goes down you know it makes it worse if you lump sum it but if the market continues to average what it is always

averaged on average you're always going to come out better off lump summing so I lump summing but that's because of averages and I'm you know and so on average most of the time that's

going to work more times than not that's great yeah but in and you know even if you made see a six percent seven percent on 8 thousand dollars rather than 11% on 4 thousand dollars it'd be the same you still make more money right even if the market didn't do what it usually does not is down but it's just not up as much as it usually is so that's why it works out so as long as you can emotionally

afford to open up your computer screen and go crap it went down and you don't freak out right if you can do that I can do that because I never put it in I never look at it again once I put it in

I'm just thinking out 20 years I'm not thinking out to two days Jeff if you max out your if you max out your Roth is that you're full 15% or what does that put you out

percentage wise close to it close to it yeah I think I have a little bit more after that if I do it for you my wife okay okay I was thinking you might be able to get the best of both worlds in some ways where you're

maxing out is this a Roth 401k or an IRA IRA okay you can't lump sum a 401k oh that okay well there you go so he could get the best of both worlds by lump summing

that and then still doing some dollar cost averaging into his normal 401k yeah that's true certainly the balance over there because you have a choice in the 401k you've got a

dollar cost average right that's right yeah I did still better I know you're saying it's emotional I think it's even easier on the January 1st I can just do it all and say hey look I'm like almost my 15% for the year I can kind of

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