2015 IRA Reminder

It’s tax time again! While nobody (other than accountants, perhaps) enjoys this annual ritual, it is important to remember that it does put a deadline on your opportunity to reduce your taxes AND get yourself better situated to meet your future financial goals by contributing to an IRA.

Let’s consider: if you invest the maximum 2014 amount of $5,500 ($6,500 if you’re age 50 or more), that single contribution could grow to a surprising amount! Look at the table below:

			Years Invested
Amount Invested	Annual Rate of Return	10	20	30	40
$5,500	8%	$11,874	$25,635	$55,345	$119,485
$6,500	8%	$14,033	$30,296	$65,407	$141,209

We used a hypothetical compound annual return rate of 8% per year and also assumed that the money remains invested throughout each full timeframe. If your investments earn more or less than 8%, the amount at the end of the investment period will, of course, be correspondingly more or less. No matter what rate of return the markets actually return over the various time periods, a failure to invest will produce an ending portfolio of exactly zero.

Many people do take the opportunity to contribute to their IRA before the April 15^th deadline. However, many of them simply park their money in a money market account thinking that they will get around to properly investing it when they have more time. Unfortunately, a large proportion of those funds will never be fully invested, depriving the owners of the chance to grow that money into something meaningful.

Contact Summit if you would like help with the investment of your 2014 IRA contribution.

Post from: Insights