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What is an IRA? Here's the gist

With an IRA, you get a practical way to start or supplement your retirement savings. And it comes with tax breaks to boot.

The basic definition

What is an IRA?

An IRA (individual retirement account) is a personal, tax-deferred account the IRS created to give investors an easy way to save for retirement.

What it does

It provides an excellent opportunity for your retirement money to grow and compound faster than it would in a taxable account.

What you can do

You can open an IRA on your own through almost any bank, brokerage company, insurance firm, or investment company.

And you can save your way for your retirement through the wide variety of investment choices that an IRA offers.

For example, at Vanguard, you can choose from our broad range of low-cost mutual funds and exchange-traded funds (ETFs), as well as individual stocks and bonds and funds from other companies.


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The snowball effect that happens when your earnings generate even more earnings, not only on your original investments, but also on any interest, dividends, and capital gains that accumulate. That means that your "money makes money" and can grow faster over time.