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I just had one of those Duh moments. The previous thread made me actually think a bit about my investment schedule. Since I opened my Roth years ago, I have had an automatic investment each month for 1/12th of the IRS limit for that year. Rationally or not, I preferred to DCA even though I theoretically was lowering my returns by not being fully invested throughout the year even though I have become more affluent and could contribute the full amount on January 1st if I chose.

Well, the Duh moment is that I could still contribute the full amount into the account on the 1st into a MMF and still DCA into equities if I choose (after all, I'd be sitting on cash anyway as it slowly was deposited in the IRA throughout the year). So, for the past 6 years or so (guestimating when my cashflow would easily allow me to lump sum contribute) I have been paying more taxes than I had to. Doh! This Jan, I will open an MMF in my IRA and transfer the full amount.

In 2007, I contributed (or will soon) the full $4K in $333.33 chuncks. So, my average annual taxable balance was about $2K. Sitting in a MMF fund earning 5%, my taxable interest income would be $100 higher; of which the IRS will gladly confiscate at least $25! Compound this over the last few years and I've lost hundreds of bucks! Tisk, tisk.

Learn from my mistake people... I did.

FoolNBlue (Really hates playing the tax game but that's another post...
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