IRA and retirement planning information presented by Ed Slott and Company, America's IRA Experts. Includes daily IRA, tax and retirement planning information and insight for financial advisors and consumers.
Contributing to a retirement account EARLY in your life and EARLY in the year can pay big dividends over the long run. How? The magic (well, not quite magic) of compound interest goes to work and increases its power with time, more time between opening a retirement account and needing the money and more time in a year to collect on the average rate of return.
Ed Slott and Company IRA Technical Consultant Jeffrey Levine uses some example formulas in the video below to illustrate compound interest's power and how contributing early is the best way to take advantage of it.
Compound interest is simply something that escapes some people's understanding. Feel free to enjoy this video. We like to enhance this concept with Roth IRAs. For instance I have a client who is able to fund her Roth IRA by doing a conversion that is virtually income tax free. Another couple is working past 70 and we are funding Roth IRA's, again, virtually for free. Call for more information 866-589-9366 or visit us at http://onestawealth.com
Where do you find an interest rate of 8% or 6% to compound you IRA or Roth IRA money???? You should use a more realistic current interest rate of less than 2% to state your point. You are sugar coating the fact and make it sounds too rosy. I knew of the power of compounding and had enjoyed it for years until recent time.
I don't agree that making your full IRA contribution early each year is the best way to go. By doing that you are losing out on the benefits of dollar cost averaging. What if asset prices are inordinately high at the beginning of the year? Best to spread out your contribution over the course of the year.
3 comments:
Compound interest is simply something that escapes some people's understanding. Feel free to enjoy this video. We like to enhance this concept with Roth IRAs.
For instance I have a client who is able to fund her Roth IRA by doing a conversion that is virtually income tax free. Another couple is working past 70 and we are funding Roth IRA's, again, virtually for free.
Call for more information 866-589-9366 or visit us at http://onestawealth.com
Where do you find an interest rate of 8% or 6% to compound you IRA or Roth IRA money???? You should use a more realistic current interest rate of less than 2% to state your point. You are sugar coating the fact and make it sounds too rosy. I knew of the power of compounding and had enjoyed it for years until recent time.
I don't agree that making your full IRA contribution early each year is the best way to go. By doing that you are losing out on the benefits of dollar cost averaging. What if asset prices are inordinately high at the beginning of the year? Best to spread out your contribution over the course of the year.
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