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Our Quote and Chart of the week: Want a free $15,000? The timing of your IRA contribution can make all the difference.

IRA procrastination post image

 

This week on Begin To Invest, we are all about setting up 2015 to be the best year possible. Here’s one thing you can do tomorrow to improve your long term returns: Contribute to your IRA! (Before April of 2016)

 

 

Vanguard has looked into the timing of investors IRA contributions and found an interesting result, most investors wait until the last minute to fund their IRAs for the year:

 

IRA contribution chart

 

 

The problem? Those investors missed the chance for a full year’s worth of compounding returns!

 

Vanguard calls this a “Procrastination Penalty”:

 

“Missing out on a year’s worth of tax-advantaged compounding is like paying a “procrastination penalty.” As shown in the hypothetical example at right, over 30 years, a “last-minute” investor could wind up with less than an ‘early bird’ investor”.

 

How much does it cost investors? On average, over 30 years, investors’ procrastination costs them over $15,000!

 

IRA procrastination cost

 

 

Why wait? Set up your 2015 IRA contribution today!

You can read more on Vanguard’s site here: https://personal.vanguard.com/us/insights/article/ira-insights-procrastination-022014

 

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