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Monthly vs. Annual IRA Contribution Experiment – July 2013 Update

August 12, 2013 by Long Pham

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

Monthly Contribution Roth IRA

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

Monthly vs. Annual IRA Account Comparison

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.

IRA Contribution Timing Experiment Updates

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Category: Money Tags: Budget For Wealth, IRA Experiment

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