Net Worth Challenge

In the past I would typically balance out my Roth IRA contributions throughout the entire year. I would start the New Year by seeing what the maximum allowable contribution would be for the entire year and divide it by 12 to determine my monthly contribution amount. For instance, in 2007 this would mean:

• $4,000 / 12 = $333.33 per month

However, I’m taking a different approach this year by attempting to make my contributions earlier. I am bullish on 2007 and believe the market has no place to go but up. Plus, I have a large reserve of cash sitting in my money market account at Vanguard, which I believe could be put to good use through this plan.

Now some of you are thinking, “wait a minute, what would it mean if you were bearish on the market instead?” Regardless of what I think the market will do in a given year, I will always contribute the maximum allowable amount into my Roth IRA (and my wife’s Roth IRA) for the year. But if I were bearish in a given year, I would follow the plan of balanced contributions for the year (ie, $333.33 into my Roth IRA each month).

With that explanation said, I made a $1,700 contribution last Tuesday into my Roth IRA account for 2007. I have not yet made a contribution into my wife’s account, but I expect to in the middle of this week. The maximum allowable contribution into a Roth IRA (if you meet the IRS income requirements) for 2007 is $4,000. With my contribution from Tuesday into my Roth IRA account, this means I can still put in $2,300 for tax year 2007. I can also put in $4,000 into my wife’s Roth IRA account for tax year 2007.