It’s only February, and Charly Stoever has already made a sizeable portion of their investments for the year.
At the beginning of each year, Stoever, the founder of Traveler Charly Money Coaching, makes the maximum contribution to a Roth individual retirement account, meaning they hit the $7,500 limit for 2026 back in January.
“A lot of people think that it’s better to drag out investing for retirement throughout the year and do what’s called dollar-cost averaging,” Stoever says, referring to a strategy of investing a set amount of money at regular intervals. “But for me, it just works better to front-load and max out my individual retirement account the first week of January in order to capture the entire year’s worth of gains.”
Stoever’s business has never made more than about $60,000 in a year, and, after taxes and expenses, the financial coach pays themselves even less. According to Stoever, that means their Roth investment is roughly 25% of their annual income.
“But if I don’t do that, I will not retire. So I’m willing to bite the bullet and just front-load my investments,” they say.
Front-loading your investments can offer advantages
A Roth IRA is a tax-advantaged retirement account funded with money you’ve already paid taxes on. Money grows within your account tax-free and when you turn 59½, provided you’ve held the account for at least five years, you can withdraw all of your funds, including your gains, without owing a dime to Uncle Sam. For 2026, single filers can make the maximum contribution provided they earn a taxable income of less than $153,000. The benefit phases out completely for those with incomes above $168,000.
When it comes to funding long-term accounts, many savers and financial pros are fans of dollar-cost averaging. Part of the thinking behind this strategy is practical. Not everyone has a few thousand dollars laying around to invest. Plus, many investors already do it without thinking, in the form of contributing to a 401(k) via regular payroll deductions.
The other thing going for dollar-cost averaging has to do with investor psychology. Investing in this robotic sort of way can help take the emotion out of managing your money, says Juan G. HernandezAriano, a certified financial planner and principal at WealthCreate in Houston, Texas. It doesn’t matter if the market is up, down or sideways — you just invest the way you always do.
“[Dollar-cost averaging] is not about maximizing the returns,” he says. “It’s about maximizing the probability that someone will actually stay invested and continue to stay invested.”
So far, Stoever has had no problem staying consistent in their lump sum strategy. And over long periods, HernandezAriano points out, it’s a mathematically superior strategy. “If someone’s used to contributing lump sum, it’s much better,” he says.
Consider two investors, one who invests $7,500 at the beginning of the year, and another who chops it up into $288 biweekly investments. If the market climbs over that 12-month period, the lump sum investor comes out ahead, since they had more exposure to the upswing.
The gradual investor would come out ahead if the market trended downward, with whatever cash they had on the sideline throughout the year safe from the decline.
Because the U.S. stock market has historically trended upward, a lump sum strategy will tend to produce higher returns over time. In an analysis of 1,000 overlapping seven-year historical periods, analysts at Morgan Stanley Wealth Management found that a lump sum approach generated higher returns than a periodic investing strategy in more than 56% of cases.
Overall, the method you use to save doesn’t matter as much as establishing the habit of consistently saving a portion of your income toward long-term goals, such as retirement, HernandezAriano says. It can also be beneficial to speak with a trusted financial professional about which strategy is right for you.
Stoever recalls receiving that message at age 26 from a financial mentor.
“She pretty much convinced me that I just need to max out my Roth IRA — at the time, the limit was about $5,500 a year … And that was a significant part of my overall income,” they say. “But I saw it as non-negotiable for me, because if I don’t do this, I’ll have to work forever. And I’m not about that life.”
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