Why funding your IRA early might help maximize your return

MassMutual Blog
By Shelly Gigante
Published January 23, 2018

First and foremost is the risk inherent in market timing, said Bill Brancaccio, a financial advisor and founder of Rightirement Wealth Partners in White Plains, New York.

Investing a lump sum ($11,000 for singles or $22,000 for couples) into the market at any single point makes your investment more vulnerable to market swings, he said. “What if you dump the money into the account January 1st and the market has a correction that year?” Brancaccio asked. “If you had put $450 in per month, you could have potentially done better.”

For most retirement savers, he said, dollar-cost averaging is recommended. This is an investment strategy in which you invest a smaller, fixed amount into mutual funds or retirement accounts at consistent intervals — thus spreading your stock purchases out over time. That helps to ensure that you won’t get stuck buying all your shares when they’re trading at a peak price.

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