Monthly vs. Annual IRA Contribution Experiment - July 2013 Update

The Monthly vs. Annual lump-sum IRA contribution timing experiment July 2013 update.

Annual Contribution Roth IRA

Fund	Shares	Price	Cost Basis	Market Value	Gain/Loss	Gain/Loss %
VTSMX	202.69	42.50	6,921.06	8,614.32	1,693.26	24.47
VGTSX	187.90	15.35	2,694.52	2,884.27	189.75	7.04
VBMFX	103.72	10.67	1,143.29	1,106.65	-36.64	-3.20
	Totals:		10,758.87	12,605.24	1,846.37	17.16

Account Summary :

07/31/2013 – Reinvested $2.17 dividend for Vanguard Total Bond Market Index Fund

Fund	Shares	Price	Cost Basis	Market Value	Gain/Loss	Gain/Loss %
VTSMX	152.73	42.50	5,404.93	6,491.20	1,086.27	20.10
VGTSX	144.54	15.35	2,096.60	2,218.77	122.17	5.83
VBMFX	80.13	10.67	885.01	854.98	-30.03	-3.39
	Totals:		8,386.54	9,564.95	1,178.41	14.05

Account Summary :

07/01/2013 – Contributed $458.33
07/01/2013 – Purchased mutual funds
07/31/2013 – Reinvested $1.68 dividend for Vanguard Total Bond Market Index Fund

Account	Gain/Loss %	% Change From Prior Month
Annual	17.16	4.79
Monthly	14.05	4.74

Analysis :

The markets recovered in July, reaching record highs.
Most of the activity was due to fears of bond prices, especially municipal bonds and their yields.
Many investors, chasing yield, fled from bonds and put their money into long-term stock funds; thus, explaining the market recovery.
As a result of the rising prices, the yearly contribution IRA is leading by a little more than 3%, which is actually quite substantial. In consideration for the experiment, it’s actually kind of nice to see the offset from the bond funds. It gives us a small look at how having a steady portfolio allocation gives us some diversification.
In a year and a half, without putting forth much effort, being invested in index funds (through either method) gave us a return of more than 14%. It just goes to show you that the common person, without having much investment knowledge, can reap gains from investing through discipline and a steady investment policy.