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.
Talk to me, Goose.