re: Roth IRA - Question about contributions

The most he'd get from the Ally account is roughly $55 if he held the $5500 in the savings account for the entire year, and then funded the Roth the following year. I'm willing to pass up $55 in order to be able to immediately take advantage of a security(s) that hits a price target on a limit order.

On the first business day of each year, I drop the max into my Roth. If I can't beat 1%/$55 (or in my case, $65) in interest, then I probably shouldn't be investing on my own. But that's just me. If a person would rather make a monthly or quarterly contribution and then immediately buy something, that's fine too. You can dollar cost average using either method.

Whichever method is preferable, the main thing is to take full advantage of tax exempt or tax preferred accounts.