Front-Load Your IRA For Biggest Payoff
By Arielle O’Shea
Happy New Year! Do you have $5,500 to spare?
It’s an uncomfortable question, especially if your credit card is still smoking from last month. There’s no hangover quite like a holiday financial hangover.
But I ask because that’s the amount it takes to fully fund a traditional or Roth IRA for a year, and there’s a lot of value — a five-digit value — in front-loading your contributions.
“By front-loading, you end up with almost a third more after 10 years,” says Dan Egan, Betterment’s director of behavioral finance and investing. Egan found that only in individual years with serious market crises — the Great Depression, the dot-com bust — did early investors fail to earn a premium.