Dollar Cost Averaging vs. Lump Sum Investing for Roth IRA Contributions

When deciding whether to dollar cost average or lump sum invest for Roth IRA contributions, it is important to consider your income limits and contribution limits. If you're close to the funding limits and want to make direct contributions to a Roth IRA, it may be wise to wait until you have a clear understanding of your numbers before deciding. However, if you are unlikely to exceed the limits and have the option to do a backdoor Roth conversion, you could consider dollar cost averaging. It may also be beneficial to accumulate cash in the months leading up to the new year, as you can earn a healthy return on it before funding your Roth IRA.