Pragmatic Finance

After calculating my networth last week I was a little suprised by how much cash I had, mostly from 0% balance transfer offers. I decided to max out my Roth IRA for the year as I had plenty of non BT money to fund it.  The only choice was to decide if I should funds it in monthly intervals to take advantage of dollar cost averaging or just go with a lump sum. Well, I chose the latter, thinking that now would be a good time to invest as stocks got pounded at the end of last week. I guess you could say I was ‘buying the dip.’

My funds were invested by Tuesday and the Dow quickly lost over 300 points in the next 3 days. Ouch. My contributions for last and this year are in Vanguard’s Target Retirement Fund 2045 so its 90% stocks. Needless to say, in the last week I’ve lost some serious $$ there. I think I am going to read up on dollar cost averaging before next year comes along.

As expected the Federal Reserve raised the federal funds rate to 5% today, up from 4.75. What everyone was really watching for was an indication if there was going to be more raises in the future. And of course they were cryptic in their future plans. My guess is Bernanke will continue to raise rates until the economy begins to slow but who knows. It will be interesting to see if any of the online savings accounts increase their interest rates in the next month. I’m hoping GMAC will continue to peg their money market account to the fed rate, as it is 4.75% apy currently.