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Subject:  Re: ROTH IRA Date:  3/21/2001  5:08 PM
Author:  JDOyster Number:  28560 of 87978

TPAAMT: Is it a good idea to contribute $2000 to the Roth IRA in one lump sum or should I do $166 a month for the whole year?

PMcMullenCT: Generally, the sooner you contribute, the better. On average, the market tends to go up (somewhere in the neighborhood of 11% per year).

On the other hand, there are advanages to dollar-cost averaging; since the market doesn't go up in a straight line (as we are all PAINFULLY aware), by buying more frequently, your purchase price will average out over the year. If you buy all at once, you might by on a "peak" or you might buy on a "dip." But, if you buy more often, you'll end up buying "the average." If it is a volatile fund or security, it makes sense to shoot for the average.

Of course, that depends on your transaction cost structure not penalizing lots of small purchases.

ALSO, you really need to have the discipline to send in that cheque every month and not convince yourself, "I really need a big-screen TV for March Madness. I'll raid the IRA fund and pay it back...eventually."

Just another point of view,
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