The person who first said, “Don’t put off until tomorrow what you can do today,” didn’t understand the benefits of tax-deferred investing. This option allows you to defer paying taxes on investment returns until retirement – when your income tax rate may be lower. In addition, this can jumpstart your overall performance today by keeping the principal amount intact, so it grows via compound interest.
How dramatic a difference can the combination of compound interest and tax-deferred growth make? I’ll let the numbers do the talking. The attached flyer from Franklin Templeton, Tax Wise: The Power of Tax-Deferred Investing, offers a vivid illustration of the impact it can have on investment results over time. It’s certainly eye-opening, so take a look.
You might be surprised by how much growth you can achieve with these simple benefits allowed in retirement accounts. If you have any questions about your retirement accounts or how to take better advantage of compound interest and tax deferrals, let’s connect.