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I'm 27 years old and trying to get my finances in order. I am very new to investing.

I have around 50k in the stock market (mainly VOO, VTI, QQQ) but it wasn't done with any intelligence. I mainly just dumped money every once in a while and didn't properly do dollar-cost-averaging.

I make 115k/yr, and my employer's retirement benefits are insanely good. I'm trying to reduce my expenses and funnel maybe 20% of my salary into the stock market per year so that my personal investment portfolio is as handsome as my 401K.

My plan was to, at the same time every week, dump around 500 dollars into some portfolio, say 90% VOO, 10% QQQ. However, I'm not sure if I should just buy at the market value, or use limit orders of, say, -5% to try to get a better deal. What is the general guidelines for that? Should I buy some at market value, and then also put in a lower priced order in case the share price falls?

Any other considerations or tips are very welcome. Thank you.

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    How do you "properly" do dollar cost averaging given that it doesn't actually work
    – Robert Longson
    Commented May 30, 2023 at 0:32
  • Are you maximizing IRA, 401k, and also utilizing backdoor and mega-backdoor Roth IRA conversion?
    – Matthew
    Commented May 30, 2023 at 0:38
  • @RobertLongson I'm not sure I understand the objection. It's not like I've run into a sudden windfall. I have a job that pays me every 2 weeks. In order to lump sum invest, I would need a lump sum. Wouldn't that just entail me saving money and only investing say, every 6 months as opposed to every 2 weeks, which is just DCAing at longer intervals?
    – john morrison
    Commented May 30, 2023 at 7:35
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    How often do you get your salary? Statistically, it is always best to invest as soon as you can. E. g., salary once a month -> invest once a month. Salary every two weeks -> invest every two weeks. OTOH, if it makes you feel better, you always can sacrifice a mini portion of gains for a better feeling.
    – glglgl
    Commented May 30, 2023 at 7:41
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    "I mainly just dumped money every once in a while and didn't properly do dollar-cost-averaging." That's all that dollar-cost-averaging is. Investing at (roughly) fixed periodic intervals. If you strategically put in finds based on market prices then you're timing the market which is different.
    – D Stanley
    Commented May 30, 2023 at 13:46

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I'm not sure if I should just buy at the market value, or use limit orders of, say, -5% to try to get a better deal.

If you are planning on keeping these investments for many years why are you willing to wait for a 5% drop before investing? You could wait weeks, months, or years for that to occur. While you are waiting the money you are wanting to invest will be sitting around earning very little interest.

Papers exist investigating the usefulness of dollar coast averaging. It looks like lump sum investing works for most people. The plan to take a portion of each check and invest that money is a common plan. There is no need to make it more complex by splitting it in half or using limit orders. Once you have decided how to invest that money from your paycheck, do it as quickly as you can, and only adjust the targets when the situation warrants a change.

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    While I generally agree with the sentiment, the idea that money sitting around "earn[s] very little interest" isn't true anymore. We went from 0% to 4.5% yields on cash so quickly people still haven't adapted their mental framework to it.
    – Chuu
    Commented May 30, 2023 at 20:20
  • It depends on how much money their broker is paying them for cash.
    – mhoran_psprep
    Commented May 30, 2023 at 21:12

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