Roth IRA Contributions, Slowly Over Time or All At Once

[myrdale]

The 2024 limit for the Roth IRA is now $7,000. And it's not that it is some magic number but suddenly it starts to hurt a bit throwing that much in all at once. But what the heck I did it anyway. What's your opinion on maxing it out? Do you do a little every month, or do you knock it out in one go?

[disneysteve]

I would max it out as soon as you are able to do so. That gets the money growing tax-free as early as possible. There's no benefit to waiting.

Now that does not mean that you need to invest it within the Roth in a lump sum. You can park the 7K in the money market and still do dollar cost averaging into mutual funds or ETFs if you'd prefer. Or just do the lump sum as investing once a year is technically dollar cost averaging also.

[crazyliblady]

The 2024 limit for the Roth IRA is now $7,000. And it's not that it is some magic number but suddenly it starts to hurt a bit throwing that much in all at once. But what the heck I did it anyway. What's your opinion on maxing it out? Do you do a little every month, or do you knock it out in one go?

I am new to the Roth IRA game. I opened my account in October. I wish I could afford to max it out right away, but I can only do $25.00 per pay period. I echo disneysteve that if you can afford, as in you have no other reasons to not do it, then do it. Your future self will thank you. As my salary increases and I pay off debt, I will definitely increase it.

[kork13]

In general, I tell people to invest money as soon as you have it available to do so. The idea is that time IN the market is way more important than timING the market. If you're able to have the money to invest & plow into IRAs all at once, that's great. If you can't, no problem & you can make it happen more slowly as the money becomes available to invest.

That said, I DCA twice monthly, because that's how often I get paid. Could I break open my savings & max out our IRAs all at once? Yes ... But that would be impractical for us, because those savings exist for other reasons ... Not investing. So the money to invest comes from my paycheck, and when I get paid, the money designated for investment gets added to my accounts.

[crazyliblady]

In general, I say to invest money as soon as you have it available to do so. The idea is that time IN the market is way major important than timING the market. If you're able to set aside money to invest & plow into IRAs all at once, that's great. If you can't, no problem & you can make it happen more slowly as the money becomes available to invest.

That said, I DCA twice monthly, because that's how often I get paid. Could I break open my savings & max out our IRAs all at once? Yes ... But that would be impractical for us, because those savings exist for other reasons ... Not investing. So the money to invest comes from my paycheck, and when I get paid, the money designated for investment gets added to my accounts.

I totally agree with keeping savings separate. After all, it would be a bad idea to have to raid your Roth IRA to repair your car or house.

[LivingAlmostLarge]

All at once. but I tend to park money in a savings account all year for contribution in january

[myrdale]

I am new to the Roth IRA game. I opened my account in October. I wish I could afford to max it out right away, but I can only do $25.00 per pay period. I echo disneysteve that if you can afford, as in you have no other reasons to not do it, then do it. Your future self will thank you. As my salary increases and I pay off debt, I will definitely increase it.

Getting started on the Roth IRA is HUGE! Good job on getting it started!!! I didn't start mine until after I spent nearly a decade paying off the house. In retrospect, I wish I'd started it on day 1 even if I never maxed it out.

[kork13]

Getting started on the Roth IRA is HUGE! Good job on getting it started!!! I didn't start mine until after I spent nearly a decade paying off the house. In retrospect, I wish I'd started it on day 1 even if I never maxed it out.

Agreed. An advisor in college convinced me to start my Roth IRA, and except that first year or two in college, I've maxed it out ever since. It has made all the difference in getting me started on the path to financial security, even though it's current value is less than 15% of my current assets. The Roth (and the discussion that sparked me to open it) changed my entire mindset about money.

[disneysteve]

Agreed. An advisor in college convinced me to start my Roth IRA, and except that first year or two in college, I've maxed it out ever since. It has made all the difference in getting me started on the path to financial security, even though it's current value is less than 15% of my current assets. The Roth (and the discussion that sparked me to open it) changed my entire mindset about money.

When my daughter was in high school, I made her report her all-cash babysitting income solely so that she could then open a Roth when she was 16. She didn't owe any taxes on the money as her income was too low so there was no downside. Fast forward to today and at 28, between her Roth and a couple of other things, she's got right around $100,000 in savings and maxes her Roth every year.

[bjl584]

I have always contributed to mine monthly. Little less of s sting when it's spread out over the year.

[srblanco7]

Always worked for us to fund as part of our monthly budget.