Although most savers can only contribute up to $6,000 every year into a Roth IRA, that money adds up when you don’t have to think about future capital gains taxes. You can allow the power of compounding to take control without any disruptions.
Let’s say you’re 23 and you contribute $6,000 every year to a Roth IRA. By the time you reach 60, you could achieve millionaire status if your investments are earning a 7% return. At this point, you can sell investments in your Roth IRA and take the earnings without splitting any profits with the IRS. Even if your annual income is $3 million for the year, you still won’t have to pay any capital gains taxes when you sell your stocks in your Roth IRA.
Stashing money away in a Roth IRA is something to consider if you expect to climb the income ladder. The more money you can save now, the better chance you’ll have of building a massive portfolio of investments that is exempt from capital gains taxes.
10 stocks we like better than Walmart
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