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How To Retire Rich

Retirement is simply the act of leaving your job and ceasing to work. It is the time where you finally have the chance to enjoy or pursue your favorite activities without the stress of a 9-to-5 job. It is the time to travel the world and spend time with your loved ones. Overall, retirement can be a life with no stress.

But what if you can retire rich? For some people, retiring with enough money to live comfortably can be difficult, let alone retiring rich. But what if I tell you that retiring rich is not an impossible dream.

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Yes, it will require discipline and hard work, but you can get there. Time, a portfolio of stocks, bonds, and mutual funds, and rental properties can make you rich.

Retirement accounts, as any financial advisor would tell you are also your best friends when it comes to retiring rich. The reason is that there are significant tax benefits that come from investing your money through retirement accounts. Here are some of the strategies you will need to implement in order to retire rich.

Invest as early as possible and do it aggressively

When it comes to retiring rich, the sooner you start saving the bigger your savings will get by the time you’re ready to retire. It is so because of the power of compounding interest. If you think that you can postpone investing now by making higher contributions later, then think again, because money doesn’t work that way.

Basically, compound interest is interest you earn on your interest. So if you start saving in your 20s rather than your 30s, you will end up with tens of thousands more worth of retirement savings account.

Feeling Overwhelmed With Your Finances?, You have options and there are steps you can take yourself. But if you feel you need a bit more guidance, simply speak with a financial advisor. SmartAsset’s free tool matches you with fiduciary advisors in your area in 5 minutes. If you are ready to meet your goals, get started with Smart Asset today.

Invest in all of the wealth-building retirement accounts.

In order to retire rich, you need to invest your money in assets that have the potential to build wealth. Assets like stocks and properties have been proven to be wealth-building vehicles.

For example, a house or condo bought in 2019 for $650,000 can be worth almost $1.1 million in 2024. That’s a return of $450,000 in just 5 years.

The same thing is true when you invest in stocks. Although investing in stocks is risky, it can lead to high returns.

Take for example a blue chip company like McDonald, a brand name that almost everyone on this planet earth knows. Let’s say you bought 10,000 shares at $6 a share in 1990. In 2019, you would be sitting with over $1,970,000 in your account, plus around $300,000 in cash dividends. This assumes that you did not reinvest those dividends and that you did not buy another share for the rest of your life.

Spend less than you earn

Spending less money and earning more money is, hands down, one of the best ways to get rich. Every single dime spent on unnecessary things is money that could have been invested.

Clear your debt

If you have debt, especially credit card debts, it could eat up your retirement savings.

Participate in your employer’s 401(k) plan

If you have a 401k plan at work, you definitely need to take advantage of it. Otherwise you’re leaving free money on the table. A 401k plan is a tax-advantaged retirement plan where your job deducts a portion of your paycheck upon your request and puts it into a retirement account for you.

The two great things about participating in a 401k plan are that, one, your money grows tax-free; second you get to take advantage of your employer’s match if they offer one.

Max out your 401k every year

Not only should you participate in your company’s 401k plan, you also need to max it out every year. In fact, this is the best and fastest way to become a 401k millionaire.

Also, the interests and dividends earned and price appreciation are compounding tax-free. This is a powerful feature that enables you to accumulate wealth.

Contribute to an Individual Retirement Account (IRA)

An IRA is another type of tax-advantaged retirement account. Anyone who is working can put (the maximum amount you can contribute in 2019) $6,000 or $7,000 if you’re 50 or older to a traditional IRA or Roth IRA. Just like a 401k account, your money in a traditional or Roth IRA will grow through the interest earned or the dividends paid out.

Refrain from withdrawing money from your retirement accounts

Although there are circumstances where you absolutely need the money, do not withdraw any money from your retirement accounts. When you take money out of your 401k or traditional IRA before you reach retirement age, you’re subject to a 10% penalty plus the regular tax hit.

Not only you might get hit with a 10% penalty, you’ll also prevent your money from growing,

So never take money out of your retirement accounts unless you absolutely need it and without talking to a qualified financial advisor.

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If you want more coverage on the topics discussed above, read the following articles:

While learning how to retire rich, here’s what you can do in the meantime:

First, you can start a blog.

If you’re interested in earning passive income, then you need to create your own blog. It’s one of the best ways to make money while you sleep.

Starting a website with Bluehost takes less than 15 minutes and hardly costs anything. And there are several ways to monetize your website.

Read our step-by-step guide on how to start a successful blog in 15 minutes. It’s one of the best passive income streams you can have.

Third, If you’re thinking of buying a house, estimate how much you may be able to borrow. Get pre-qualified.

Fourth, maintain a good credit score.

A good credit score of 730 means that not only will you able to get qualified for mortgage loan, it also means you’ll get qualified for a better interest rate. And being able to get a better interest rate means that you will have lower monthly mortgage payments. This, in turn, means that you’ll save thousands of dollars on interests.

Click here to check your credit score with MyFreeScoreNow. It’s completely FREE.

Tips on Choosing Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now

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