Annual vs. Monthly IRA Contribution Experiment – September 2014 Update

The Annual vs. Monthly IRA Contribution Timing Experiment September 2014 Update.

Annual Contribution Roth IRA

Shares Price Total Cost Market Value $ Gain/Loss
312.50 18.61 5,500.00 5,815.62 315.62

Account Summary:

  • No account transactions to report.

Monthly Contribution Roth IRA

Shares Price Total Cost Market Value $ Gain/Loss
236.08 18.61 4,272.00 4,393.53 121.53

Account Summary:

  • 09/01/2014 – Contributed $409.00
  • 09/01/2014 – Purchased mutual fund (VTIVX)

Annual vs. Monthly IRA Account Comparison

Account % Monthly Return Total % Gain/Loss
Annual -4.24 5.74
Monthly -4.24 2.84

Analysis:

  • The market took a dump in September, reducing the gains in both IRA accounts.
  • The Monthly Contribution IRA took a huge hit because shares were purchased on the 1st of the month, after the August rally, and then fell by the end of the month.
  • This is the first prolonged plateau/dip in the market I’ve noticed (but it could be because of recency bias) since starting the original Contribution Timing Experiment in 2012. Even though I don’t advocate market timing, for contrarians, this could be a signal to start thinking about purchasing. It’s always a great time to buy index funds, but it’s always nice to get them a little bit cheaper.

IRA Contribution Timing Experiment

Annual vs. Monthly IRA Contribution Experiment – August 2014 Update

The Annual vs. Monthly IRA Contribution Timing Experiment August 2014 Update.

Annual Contribution Roth IRA

Shares Price Total Cost Market Value $ Gain/Loss
312.50 19.14 5,500.00 5,981.25 481.25

Account Summary:

  • No account transactions to report.

Monthly Contribution Roth IRA

Shares Price Total Cost Market Value $ Gain/Loss
214.72 19.14 3,863.00 4,109.65 246.65

Account Summary:

  • 08/01/2014 – Contributed $409.00
  • 08/01/2014 – Purchased mutual fund (VTIVX)

Annual vs. Monthly IRA Account Comparison

Account % Monthly Return Total % Gain/Loss
Annual 3.07 8.75
Monthly 3.10 6.38

Analysis:

  • The S&P 500 rose to, and surpassed, the record 2000 mark. What does that mean to an index investor? Not much. If you’re getting the “feeling” that the market is going to take a tumble any time soon because it’s at a record high, it’s just the temptation to time the market. Stay calm, hold steady, and keep investing. As they say, stay true to the course.
  • The market rally in August pushed gains back up for both experimental accounts. The returns aren’t looking too shabby for only eight months of investing.

IRA Contribution Timing Experiment

Annual vs. Monthly IRA Contribution Experiment – July 2014 Update

The Annual vs. Monthly IRA Contribution Timing Experiment July 2014 Update.

Annual Contribution Roth IRA

Shares Price Total Cost Market Value $ Gain/Loss
312.50 18.57 5,500.00 5,803.13 303.13

Account Summary:

  • No account transactions to report.

Monthly Contribution Roth IRA

Shares Price Total Cost Market Value $ Gain/Loss
192.63 18.57 3,454.00 3,577.16 123.16

Account Summary:

  • 07/01/2014 – Contributed $409.00
  • 07/01/2014 – Purchased mutual fund (VTIVX)

Annual vs. Monthly IRA Account Comparison

Account % Monthly Return Total % Gain/Loss
Annual -1.69 5.51
Monthly -1.76 3.57

Analysis:

  • World events, announcements about ending stimulus efforts, and news of rising prices made it a choppy month for investors.
  • Both simulated accounts gave back gains from last month, but are still recording an overall gain for the year so far.
  • A falling stock market could signal that it might be better to employ dollar cost averaging.

IRA Contribution Timing Experiment

Page 1 of 4112345...Last »
© Copyright Budget For Wealth | Developed by Phamily Media