Should I open a Roth IRA now or wait to see if there’s a market correction?

Justin emailed: I am 20 years old and I would like to start a Roth IRA. I have $4,000 that I have saved for this very purpose and I will be cost averaging another $200 per month. My question is, when should I invest given the fact that we should be seeing a market adjustment in the not too distant future (heard it’s gonna be a bad one too)?

Trying to time the market is one of the all-time classic investor mistakes. The world’s most successful investors warn against this practice, so if Warren Buffett says ordinary investors shouldn’t try to predict market moves, don’t do it! Your $200 per month dollar-cost averaging seems prudent.  If you’re willing to invest the whole $4,000, we assume you’re comfortable with possibly seeing it drop 30% or more the next day – which is true any day when you invest a chunk at once in the stock market, says George Papadopoulos, certified financial planner. You’ve got plenty of time to ride out the ups and downs of the stock market, but of course, if you’re going to need that money in the next few years, best not to invest it now. Bottom line: Start now, ignore the headlines, focus on the long term, and dollar-cost average.


As for the Roth IRA, just make sure you have earned wages for the year you plan to open the Roth IRA (you have to have “earned” income; that’s income you make from working, typically in the form of salary, hourly wages, or profits from a small business).