How To Give Your IRA an Earnings Boost

This post (and accompanying video) is about how to give your IRA contributions an earnings boost…and the simple answer is time. Most investors wait until the tax filing deadline to make their IRA contribution, and that contribution is actually for last year’s tax year.  At the time of this writing, I have the ability to make my 2021 IRA contribution, but I can also make my 2022 contribution now, as well.  So I can actually get my current calendar year’s contribution in more than 15 months before the deadline. For example, 2022’s contribution I have until tax day of ‘23 to make, but I can actually get it in as early as January first of ‘22. Is there an advantage to doing this? There is. Think about it, I can give every single IRA contribution an extra 15 and a half months to compound, that’s an extra 15 and half months to work for me and to make me money. Year over year stock market movements are different, but, by and large, we start in January and get higher by December because more often than not the stock market gives us more years of positive returns than it does of negative returns. If you can afford it, get in the habit of making your IRA contribution as soon as that window opens in January, not when that window is about to close in April. Your future self with thank you for the extra money.