"It's very clear why investing in retirement would put you on the path toward millionaire status. When you invest for retirement, you can put money into tax-advantaged accounts such as 401(k) and IRA plans. The tax breaks that come from making these investments can help you to save more money more easily, as each contribution you make has less of an impact on your take-home pay because your deductible contributions lower your tax bill."
"You also have a long time for compound growth to work for you when you invest for retirement. This happens when you earn returns on funds you invest, growing your balance. You then have a larger pot of money to invest, which in turn allows you to earn more returns. The more time this cycle occurs of investing, earning returns, and reinvesting those returns, the bigger your balance will grow, even without any additional contributions from you."
Two behaviors commonly lead to millionaire status: investing in retirement and owning a paid-off home. Investing for retirement through tax-advantaged accounts such as 401(k) and IRA plans reduces taxable income and makes saving easier. Employer 401(k) matches provide additional contributions that accelerate account growth. Long-term investing enables compound growth, where returns generate further returns and increase the balance over time even without extra contributions. Consistent contributions over many years amplify the compounding effect and can produce seven-figure balances. Paying off a home eliminates mortgage costs and contributes significant net worth accumulation.
Read at 24/7 Wall St.
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