Annual vs. Monthly IRA Contribution Experiment

The Annual vs. Monthly IRA Contribution Timing Experiment Version 2. This update covers the initial contribution and purchases in the corresponding Roth IRA accounts in the experiment.

Annual Contribution Roth IRA

Shares Price Total Cost Market Value $ Gain/Loss
312.50 17.60 5,500.00 5,500.00 0.00

Account Summary:

  • 01/01/2014 – Contributed $5,500.00
  • 01/02/2014 – Purchased mutual fund (VTIVX)

Monthly Contribution Roth IRA

Shares Price Total Cost Market Value $ Gain/Loss
56.82 17.60 1,000.00 1,000.00 0.00

Account Summary:

  • 01/01/2014 – Contributed $1,000.00
  • 01/02/2014 – Purchased mutual fund (VTIVX)

Annual vs. Monthly IRA Account Comparison

Account % Monthly Return Total % Gain/Loss
Annual 0.00 0.00
Monthly 0.00 0.00


  • No changes have occurred in the account.

IRA Contribution Timing Experiment

IRA Contribution Timing Experiment Rules

The following are the rules for Version 2 of the Annual vs. Monthly IRA Contribution Timing Experiment. These rules are meant to be the guidelines upon which the experiment is run.

The experiment begins on January 1, 2014 and will continue as part of a lasting effort to discover how investment timing affects performance over time.

Annual vs. Monthly IRA Contribution Timing Experiment Rules

  • Simulated Roth IRA accounts will be used for both accounts.
  • The accounts are assumed to have no annual fees, no transaction fees, no commissions, or trading costs.
  • No interest is earned on any cash balance between the time of deposit and the time of trade execution.
  • No selling will take place during the entirety of this experiment. Both accounts will adhere to the “buy and hold” mentality.


  • The Annual Contribution IRA will contribute the yearly maximum, per IRS guidelines, on January 1st of each year.
  • During the first year of the experiment, the Monthly Contribution IRA will contribute $1,000 on January 1st.  Contributions occurring during the subsequent months of the first year will be of an equal monthly amount equivalent to the remainder of the contribution maximum. Rounding may occur for simplicity.
  • After the first year, the Monthly Contribution IRA will contribute an equal monthly amount on the 1st of each month. The amount will be based on the annual maximum, per IRS guidelines, divided by 12 months. The first 11 months of contributions during the year may be rounded down for simplicity. The December contribution may include up to an extra dollar of contributions to make up for the rounding.


  • The Annual Contribution IRA will invest the entire contribution by purchasing the fund of choice on the first trading day of the year.
  • The Monthly Contribution IRA will invest the periodic contribution by purchasing the fund of choice on the first trading day of each month.


  • The fund of choice for this experiment will be the Vanguard Target Retirement 2045 Fund (VTIVX).
  • The investment minimum for this fund is $1,000.
  • All forms of income from dividends and capital gains will be reinvested.
  • Because of the nature of this fund, there are no asset allocation concerns or any need to periodically re-balance.


  • An update will be posted on the blog each month to report the changes and summarize the activities that occur in each account.
  • For simplicity, the numbers in the tables will be rounded and formatted to only two decimal places.

IRA Contribution Timing Experiment

How To Save 40% On Netflix

These days, everything is subscription based, as to try to keep customers paying for a product or service as long as possible. It’s a great business model and something that I would try to implement myself if I was trying to sell something. However, for the consumer, subscriptions can be a terrible, terrible thing.

Think about all the things in your life that are subscription based. Some of them necessities like water, gas, electricity, and trash service. Then, we have the luxuries, which unfortunately, a lot of people consider necessities. These include telephone and cell phone service, cable or satellite television, magazines, newspapers, and internet. The list goes on and on.

Those luxuries are killing your paycheck. They add up quickly and unless you take action, they’re not going to go away.

My Netflix Subscription

Don’t get me wrong, it’s completely fine to have a lot of those luxuries. Myself, I have never had cable or satellite television service my entire life (and I probably never will). I think I spend more than enough money for internet service and I can watch everything I need using Netflix. The thing is, I’ve been so busy lately that I haven’t really been using the service very much. Besides the Instant Watch plan, I also had a subscription to the two disc at a time (unlimited) plan.

During the past several months, I started to notice that I was holding onto rental discs for weeks at a time, never having enough time to sit down and watch a movie. I decided that it was a good time to review my use of Netflix, and since I wanted to keep the service, see if there were any other plans that were more appropriate for me.

I logged into my account and looked at the DVD plans. Since I average about two movies a month, I found that the best plan would be the Limited Plan. The plan allows for one disc out at a time, with a limit of two rentals per month. Perfect.

How Much I Saved

I changed my plan toward the end of the month and the changes took effect at the beginning of the next. My monthly bill with Netflix on an Instant Watch and two-disc unlimited plan used to cost me $24.18 per month. Not much, and a much cheaper alternative to cable or satellite. However, taking my usage into consideration and changing my plan to an Instant Watch and one-disc (two rentals per month) at a time plan is now only costing me $14.46 per month.

Yeah, it’s only a difference of $9.72 per month, or $116.64 per year. But you’re looking at it all wrong. This is money and finance we’re talking about, so you need to compare the change using percentages. By changing my plan I am saving 40.20% per month. That’s a significant savings.

What You Should Do

Review the Netflix subscription plan you have.

  • Realistically assess how you use the service in the present.
  • Don’t consider what-if questions. You can easily upgrade later if your usage increases.

Select a new plan.

  • Log into your account and review the current plan options.
  • Choose a better fitting service plan or cancel a plan as appropriate.

Review your payment method.

  • Make sure you are using a secure password.
  • You had better be paying your Netflix bill with a rewards credit card!

Calculate how much you will save.

  • Figure out how much you will be saving each month, and year, in dollars.
  • Calculate how much your savings will be in percent.

Do something awesome with the money.

  • Use the extra money to pay off debt.
  • Or, invest the extra money.
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