I thought this post was too good to put at the end of the guest post queue, and given the nature of the topic, it’s more valuable information early in the year.
My 401k plan allows up to 25% of each paycheck to be directed to a 401k. In order to get all $18,500 (2018 limits) deposited in January, I would need a gross salary of $74,000 per month, or $888,000 per year.
There are a few ways to look at the front loading “bonus” or monthly “penalty”. I’ll assume the market goes up at a steady 10% for the year, including monthly compounding, and $1,200 total invested.
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.