Automatic Investing vs Hand-On Active Investing?

[teal]

I currently have a portion of each paycheck deposited into a S&P 500 Index fund. I don't know a lot about investing and this seems like an easy way to do it.

My question is, do you think this type of automatic investing is better or worse than hands-on active investing? I'm wondering if I'm OK continuing to do this or if I should transition into a more active investing role?

[Jluke]

What you are currently doing is Dollar Cost Averaging (DCA) into one investment.

Active trading would include buying, selling, and perhaps even trying to time the market with buy/sells.

Would you consider yourself a buy/hold forever investor?

If active investing, your emotions may sway your decisions (big drop, you panic & sell, which equals a loss every time).

Depending on who you invest through and their requirements, if you want a more active role, start small ($500-1000) so you can get used to the ups/downs of the market.

You can choose ETFs, mutual funds, individual stocks; note whether they pay a dividend. Then you can continue to grow your portfolio if you're able to handle the fluctuations.

Always continue to educate yourself on the market too.

If you qualify for a Roth IRA, then you want to do your investing in that account so you do not have to pay taxes on those dividends, capital gains, etc.

[teal]

I would consider myself a buy/hold investor. I don't touch any of the money currently going into the index fund. I do have a Roth IRA and max that out each year.

I want to educate myself more, but I'm not sure I have the time right now. I'll look into doing that more.

[snafu]

Does your employer offer any match for retirement ? Are you contributing up to the total allowable? Do you contribute total allowable to ROTH? Is it likewise to S&P Index? Anything to International Index?

[feh]

I would consider myself a buy/hold investor. I don't touch any of the money currently going into the index fund. I do have a Roth IRA and max that out each year.

I want to educate myself more, but I'm not sure I have the time right now. I'll look into doing that more.

You're off to an excellent start - invest often (dollar cost averaging) and put that money in index funds.

To educate yourself (sounds like your next step may be determining your asset allocation), start here: http://www.bogleheads.org/wiki/Bogle...g_start-up_kit

[dczech09]

I am a huge proponent of, and I teach, automatic investing. I steer people away from hands-on active investing activities such as day-trading and market-timing.

Automated investing allows you to reap the benefits of dollar-cost-averaging. It also eliminates any mistakes made by human error or over-analysis. Also, many IRA providers will give you breaks on fees if you automate.

For example, I invest $458.33 (about $5,500 per year) on the 15th of every month into my Roth IRA. This is done automatically. Due to this and my paperless statements, I receive fee reductions and some waivers from my IRA provider.

What you are doing by putting a portion of each paycheck into an index fund is great! I would stick with that. The only question is are you using an IRA? Is your index fund inside of an IRA?

[richard johnson]

Automatic investment allows investors to contribute small amounts of money. Funds are automatically deducted from the investor's checking/savings account or paycheck and invested in a retirement account or mutual fund.