Traditional individual retirement accounts (IRAs) are known for their tax advantages, but how does a Roth IRA work—specifically, how does it grow over time? Your contributions help, but it’s the power of compounding that does the heavy lifting when it comes to building wealth with a Roth IRA.
Your account has two funding sources: contributions and earnings. The former is the most obvious source of growth, but the potential for dividends and the power of compounding can be even more important.
A Roth IRA provides tax-free growth and tax-free withdrawals in retirement.Roth IRAs grow through …