The Monthly vs. Annual lump-sum IRA contribution timing experiment April 2013 update.
Annual Contribution Roth IRA
| Fund | Shares | Price | Cost Basis | Market Value | Gain/Loss | Gain/Loss % |
|---|---|---|---|---|---|---|
| VTSMX | 201.798 | 40.06 | 6,885.54 | 8,084.05 | 1,198.51 | 17.41 |
| VGTSX | 185.48 | 15.92 | 2,695.46 | 2,952.91 | 293.45 | 11.03 |
| VBMFX | 103.12 | 11.08 | 1,136.89 | 1,142.57 | 5.68 | 0.50 |
| Totals: | 10,681.89 | 12,179.53 | 1,497.64 | 14.02 |
Account Summary :
- 04/30/2013 – Reinvested $2.10 dividend for Vanguard Total Bond Market Index Fund
Monthly Contribution Roth IRA
| Fund | Shares | Price | Cost Basis | Market Value | Gain/Loss | Gain/Loss % |
|---|---|---|---|---|---|---|
| VTSMX | 129.99 | 40.06 | 4,485.69 | 5,207.78 | 722.09 | 16.10 |
| VGTSX | 120.44 | 15.92 | 1,727.33 | 1,917.37 | 190.04 | 11.00 |
| VBMFX | 67.06 | 11.08 | 742.84 | 743.02 | 0.18 | 0.02 |
| Totals: | 6,955.86 | 7,868.17 | 912.31 | 13.12 |
Account Summary :
- 04/01/2013 – Contributed $458.33
- 04/30/2013 – Reinvested $1.37 dividend for Vanguard Total Bond Market Index Fund
Monthly vs. Annual IRA Account Comparison
| Account | Gain/Loss % | % Change From Prior Month |
|---|---|---|
| Annual | 14.02 | 2.04 |
| Monthly | 13.12 | 2.08 |
Analysis :
- The market continues to move upwards with no real signs of slowing down, even with mixed economic news.
- There is still a lot of chatter about interest rates and fear that bonds will take a big hit when rates move upward.
- With the markets rising like they are, the Annual account is starting to etch out an almost 1% advantage over the Monthly account. This is mostly due to purchasing at lower prices at the beginning of the year.
A reader that wanted to emulate the portfolio brought to my attention Vanguard’s $3,000 minimum investment requirement that apply to a number of mutual funds. This hypothetical portfolio ignored the minimum requirements to be able to demonstrate asset allocation and and the effects of dollar-cost averaging. In order to construct the portfolio with mutual funds in a new IRA/Roth IRA account, you would have to start with one fund and then build on it over time. Otherwise, you can match the allocations using Vanguard ETF’s, which have no minimum.
*This is a hypothetical portfolio and will not meet the needs of every investor. Only you can determine what level of risk and the types of investments that are appropriate for your portfolio. If you have concerns about risk or have unique circumstances, you should consult a financial adviser who can help develop an appropriate investment allocation for your specific needs. The IRA contribution experiment is a simulated portfolio and is not meant to be representative of a real portfolio. My personal asset allocation is different than that of the IRA contribution experiment.
Talk to me, Goose.