Each year, investors are allowed to contribute to their individual retirement account, but you shouldn’t wait until the last minute. With exchange traded funds, savers can diversify with broad market exposure in an IRA portfolio.
According to Vanguard, traditional and Roth IRA contributions made by Vanguard customers between 2007 and 2012 tax years reveal that on average 41% of dollars contributed to IRAs for a given tax year are invested between January and April of the following year, right up to Tax Day, reports Jonnelle Marte for the Wall Street Journal.
Investors can take as long as April 15, 2014 to contribute to an IRA for the 2013 tax year.
In contrast, the study revealed that only 10% of dollars contributed were in January of the corresponding tax year, the earliest month contributions can be made – investors can begin contributing to their IRAs for the 2014 tax year beginning January 2014.
While there are legitimate reasons for delaying contributions, such as calculating income for the prior year to qualify for deductible contributions, some advisors argue that investors should kick this habit.
“As humans we naturally procrastinate,” Mackey McNeill, an accountant and financial advisor, said in the article.