Time To Fund Roth IRA For 2008 - $10.64 Per Day

Jan 01 2008

Posted by NCN as Retirement |

Starting today, you can begin to make contributions to your Roth IRA for 2008.

(The maximum annual contribution for folks under 50 is $5000 for 2008.)

If you break it down, there are 470 days between January 1 and April 15.

$5000 / 470 = $10.64 per day

So, if you want to fully-fund your 2008 Roth IRA, you’ll need to contribute an average of $10.64 per day, for the next 470 days. Brown-bag it, skip the latte, drive 5 mph slower, drink tap water, and buy generic and you can fully-fund a retirement account.

(Of course, you don’t want to send $10.64 per day to your broker, but it always helps me to breakdown big goals into smaller, manageable ones.)

21 Responses

The Saving Freak

January 1st, 2008 at 11:24 am
1

This is a practical and attainable way to fully fund your roth. Thanks for breaking down the daily contributions.
Laura

January 1st, 2008 at 2:56 pm
2

I keep forgetting that we have a little extra room to fund our IRAs. Thanks for the tip! I love how you broke it down into a manageable amount.
Money Blue Book

January 1st, 2008 at 5:52 pm
3

Well I’m very glad they finally raised the ROTH contribution limit. It was about time!
Have a great new year!
-Raymond
kitty

January 1st, 2008 at 8:15 pm
4

BTW - people who haven’t contributed for 2007 can still do it until April 15th. During previous couple of years I always waited until I got all tax forms before contributing for the preceding year to make sure I can do it.

I can’t do it for 2007, will likely not be able for 2008 as well. I’d known I’d be in phase-out range this year even with my max 401K contribution, but selling some of my ESPP stock (way too many eggs in one basket, still is, but this was as much as I could sell and still hope to avoid AMT) brought me considerably over. Current plan is to sell a bit next year or so in some good moment (hopefully).

I am still debating if I can trust the government not to change plans to eliminate income limit on conversions in 2010. If I decide to trust them, I’d put money in a regular IRA and convert.

Yes, I know lots of people would like to have this problem. But I regret not contributing in the past when I was earning less - I only learned about Roth IRA a few years ago. So do contribute while you can. Incidentally, I don’t drink latte — in addition to being a waste of money, it is really really fattening. I also bring my own lunch to work - I can cook better than they do, and microwaves is a great invention.
Mike

January 1st, 2008 at 9:50 pm
5

Good tips and info.

Did you notice at least 3 of your suggestions (brown bag, skip lattes, drink tap), maybe/almost 4 (buy generic) are about what we put in our mouths? You can drink/eat yourself into debt.

I’m not a Starbucks fan (love Dunkin), but I’m in the coffee club at work!

Thanks, and happy new year!
Stephanie

January 2nd, 2008 at 11:09 am
6

That’s a good way to think of it…I’m trying to figure out how often to move money into my Roth, an how often to make Roth purchases. I suppose that my current rate of once a month isn’t completely taking advantage of dollar cost averaging, plus I am not putting enough in to max out my Roth, so I’d need to up my contributions. But would it be a good idea to actually purchase every day?
NCN

January 2nd, 2008 at 11:27 am
7

Stephanie! NO! Do NOT purchase stocks or mutual funds every day!!! This will drive up transaction costs!!! Once a month is more than enough… or even once a quarter…
Me? I fully-fund my accounts, all at once, and make one purchase, per year…
NCN
Two Nickels

January 2nd, 2008 at 11:33 am
8

While not purchasing any positions daily is good advice, do you think that setting up a daily transfer to your IRA would be wise? Not buying things is one step, but at the end of the week, many of us (me, anyway) notice, “Hey, I’ve got an extra $50 and I need a new this or that, I’ll fund my Roth later”. Something to think about.
Derek

January 2nd, 2008 at 11:13 pm
9

Great Post. I just got done giving everyone at my work a mini seminar(we were really slow on New Year’s eve) on why they need to invest in our new Roth 401k and why they need to start a Roth IRA. I will talk more about some other finance stuff in my new finance blog. Check it out if you have time. Thanks.

http://learningtoberich.blogspot.com/
Stephanie

January 3rd, 2008 at 3:03 pm
10

NCN, when you say that this will drive up transaction costs, what do you mean? I don’t think it costs me anything to buy more of the mutual funds I’m investing in within my Roth IRA. I agree with “Two Nickels”, I would want to maybe move money into my default account relatively often (which earns a decent percent as a money market).
And when is a good time to make the purchases? I have a feeling that a lot of mutual funds get bought on the 1st or the 15th of every month or something.
deepali

January 3rd, 2008 at 6:26 pm
11

I just keep coming back to this post because it’s amazing! I honestly did not think about savings in this way, which is retrospect is both stupid and bizarre, because I have been thinking about budgeting in this way all along.
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January 4th, 2008 at 11:37 am
12

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January 7th, 2008 at 7:30 am
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You know, with the increase in the contribution limit, a 16-year-old could put $5k in each year for the next four years, and have over $1 million dollars at the age of 59 if he never invested another dime? It is crazy! I outlined it here at, Hey Kid! Do You Want One Million Dollars?.
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January 7th, 2008 at 11:26 pm
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[...] No Credit Needed reveals the power of $10.64 per day. [...]
Derek

February 8th, 2008 at 9:30 am
21

DON’T invest more frequently. Dollar cost averaging statistically is much less effective than investing a lump sum and you don’t want to pay your broker all of those transaction fees! You will definitely lose money that way.
See article
http://moneycentral.msn.com/content/P104966.asp