We’re taking a departure from our usual scheduled programming, bringing you a timely guest post from Mike at Married & Harried on the subject of front-loading your investments.
I know PoF does. I’ve considered it since it should provide a boost to my investments given the general trend of a rising market. This boost could really add up over a lifetime of investing.
I would need a gross salary of $74,000 per month, or $888,000 per year. I’m not quite there yet. Any front-loading strategy would be spread out over much of the year.
For a 10% steady yearly return, it’s 18.3%. 8.3% higher! This means the market would need to rise at a steady 18.3% with monthly contributions to match a front-loaded strategy with 10% growth.
OK. It’s basically worth half of what the steady growth rate is. Of course, if the market rises early and then flattens, front loading has more of an advantage. If the market drops early and then rises, front-loading may have no advantage.