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What changes if you contribute at the start of the month?

Quick lesson1 min read

Two people can contribute the same amount on almost the same dates, a few days apart, and still end up with different balances. Whoever contributes at the start of the month lets each deposit work for one more period.

An example with numbers

Say you deposit $100 every month and the return is 1% a month. After two months, contributing at the end, you have $201. Contributing at the start, you have $203.01. Either way, $200 came out of your pocket.

Try it with your numbers

Try both contribution timings in the calculator with the starting amount at zero. Compare the interest earned, not just the final balance. The 1% a month in the example is roughly a 12.68% effective annual rate.

Open the calculator

Example figures for learning purposes. They are not a recommendation and do not replace professional advice.

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