Thread: WHEN to make an IRA contribution

I do. Jan. 2 is when the max. gets moved from my money market account ("Level 1 Cash Reserves") to my Roth and SEP IRAs. The sooner you contribute, the longer you enjoy tax-deferred/free growth.

Rolo wrote:

The sooner you contribute, the longer you enjoy tax-deferred/free growth.

Assuming there is growth . Theoretically, if you are a good market timer, March or May would have been better this year, no? Of course that is easier said than done. I know I started out the year expecting a pullbackso I wouldn't have made the one time deposit in early January.Whether I would have been able to get in at a lower price though, I don't know because I didn't try. I do the monthly thing. But the Jan. 2ndtheory does sound logical.

Welcome Rod!!

Tom

hehehe, Now you had to make it all complicated!

That is a good point. I did jump in and buy stuff in January without much technical analysis and market study and therefore bought a little high.

However, even taking timing into consideration, having that cash inyour IRA Jan 2 will have you ready to pounce on a buy point. If you make monthly contributions, then timing is not really an option, unless you count timing 1/12 of your contribution twelve times.

Also, if you wanted to buy a new fund and the minimum to open it is $1,000, then your $250 contribution won't cut it and you will have to either wait, or sell/exchange from another fund.

To me, one deposit once per year is just simpler to manage.

Rolo wrote:

However, even taking timing into consideration, having that cash inyour IRA Jan 2 will have you ready to pounce on a buy point. If you make monthly contributions, then timing is not really an option, unless you count timing 1/12 of your contribution twelve times.

Great points. I wasn't thinking about the option of depositing and keeping it on the sidelines.

Rolo wrote:

To me, one deposit once per year is just simpler to manage.

Plus, it is easier to have discipline once rather than twelve times.

Thanx for the comments and the welcome.

God Bless

To save so much you have 6K ready to plunk down every Jan 2 is very disciplined.... perhaps too disciplined?

Yes, theoretically, you would have more money if you invest it all at the beginning of the year, but I personally dont advocate this simply because investing monthly i think maximizes dollar cost averaging more than buying once a year. Yes if you did it for 30 years, you dollar cost averaged too, but buying more frequently, like monthy, in a very volatile fund really takes advantage of the peaks and dips better i think.

azanon wrote:

To save so much you have 6K ready to plunk down every Jan 2 is very disciplined.... perhaps too disciplined?

It depends on your cash flow (which is everything). I have good excess cash flow, so stockpiling an extra $4600 (single, 2004, Roth& SEP IRA) won't take me long.

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Az, buddy, you still around?

Yeah if you can afford it, by all means, do it.

Yeah, i'm still around!

azanon wrote:

Yeah if you can afford it, by all means, do it.

Must....hold....off........on......buying....PT... .stuff.....guuuuuuaWl...



heh

I just have to keep remembering, investing now leads to buying evenmore stuff later!