Suze Orman had some strong words for a listener who was considering drastically changing her IRA’s investment strategy. On a recent episode of the Women & Money podcast, a listener named Jane shared her concerns about the current state of the market and asked Orman if it would be smart to sell all of her current IRA investments.
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Jane said the idea behind this would be to place the proceeds into a money market fund within the IRA, and then average dollar costs back into the market over time, assuming prices might drop soon.
Orman responded immediately: “It’s the worst idea I’ve ever heard in my life.”
“Jane, don’t do it,” KT, Orman’s wife and co-host, echoed Orman’s sentiments. They quickly explained why they advised against this strategy.
The biggest flaw in Jane’s idea, according to Orman, was her assumption that the market would fall. No one can predict this with certainty. “You don’t know they’re going to come down,” Orman said. “They can keep going up and up and there you are sitting on the sidelines waiting for them to come down.”
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By selling all her assets within the IRA, Jane would essentially be trying to time the market. Orman says this poses significant risk because there is no guarantee the market will fall and Jane could miss out on potential profits while waiting for a dip that may never happen. Orman emphasized that staying invested offers continued growth opportunities, even during uncertain market conditions.
Orman suggested that Jane focus on a more traditional approach by keeping her current investments while adding new money to her IRA. She recommended that Jane apply dollar-cost averaging to her contributions, which means investing fixed amounts on a regular basis regardless of market conditions. Many investment experts argue that this approach can help reduce the impact of volatility over time and that there is no need to anticipate market highs or lows.
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