According to a 2013 study by the Investment Company Institute, about 40 percent of U.S. households own an IRA, holding more than $5.7 trillion in these accounts. Normally investors have a 16-month window between January and the following year’s April to make an IRA contribution for a given tax year. Many IRA investors wait until the last minute to make contributions. Vanguard completed an anlysis and found that over 30 years period you could earn an extra $15,500 by contributing early in January instead of procrastinating until April of the following year to contribute. The extra $15,500 assumes each investor contributes $5,500 for 30 years and earns 4% annually after inflation. Procrastination has a cost by missing out on a year’s worth of tax-advantaged compounding. To reduce procrastination, investors should set up automatic investments to make it easy to contribute regularly. (vanguard.com)
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