Invest Your IRA Contributions

April 17, 2014

fb-IRAgetinvestedDid you make an IRA contribution this year? If so, remember to invest that cash you deposited.

Many investors make IRA contributions as a way to lower their tax bills, but they will miss out on potential gains if they don’t take the next step and invest the money.

Vanguard study found that more than two-thirds of IRA contributions made in January through April was still in cash four months later.

Why? While investors “know they need to make the contribution, they haven’t necessarily made their investment choice”, Vanguard wrote.

Investing Early Adds Value Over Time

The earlier you contribute and invest your IRA contributions, the more time your investments will have to grow. You can get a head start on their IRA investing by making (and investing) their IRA contributions before tax time. For example, if you  made and invested your 2016 IRA contributions in January 2016, you’d have been invested around 15 months longer than investors who made and contributed to their IRA in April 2017.

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