Proven strategy on how to save $300,000 monthly from your Business

When most people think about growing their wealth, they think of landing a job that pays six figures. But where you put your money can be just as (if not more) important than what you earn. Keep it in a savings account and you’ll grow your wealth, but inflation will probably reduce your buying power over time.

If you want to increase your buying power and quality of life, you have to find a way to beat inflation. Below, we’ll take a look at one way that could take you from $0 to $300,000 in 20 years.

How to put your money to work for you

Investing is the best option for your long-term savings. Yes, there’s a risk of loss, but if you keep your money diversified and invest in strong companies, losses will likely be temporary. And there’s a good chance your investments grow faster than inflation over the long term.

Proven strategy on how to save $300,000 monthly from your Business
Proven strategy on how to save $300,000 monthly from your Business

If you invested the current maximum $7,000 annually in an IRA and earned a 7.5% average annual return on that money, you’d end up with over $313,000 after 20 years. A 7.5% average annual return isn’t unreasonable. The S&P 500 — a well-known market index — has a 7.7% average annual return since 1928. But it’s important to recognize that past performance doesn’t guarantee future returns. If your investments grow more slowly, it might take longer to reach $300,000.

There’s also the chance you could reach $300,000 in less than 20 years. Our example doesn’t take into account future increases to IRA contribution limits. In the coming years, you’ll probably be able to set aside even more, allowing you to reach $300,000 in savings even faster.

The downside to saving in an IRA is that you generally face a 10% early withdrawal penalty if you take your cash out before age 59 1/2. There are exceptions, including using your funds to pay for large medical or educational expenses. And you can withdraw your Roth IRA contributions tax- and penalty-free at any age. But for most people, it’s not the best choice if you hope to access your money before 59 1/2.

In that case, you might prefer to keep your cash in a taxable brokerage account instead. These accounts don’t offer the same tax advantages as retirement accounts, but they have fewer restrictions about what you can invest in, how much you can contribute per year, and when you can take the money out. You could also split some of your savings between an IRA and a taxable brokerage account if you prefer.

Frank Yeboah

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