You may have lofty goals for retirement, like getting to travel the world. Or maybe your goals are more modest -- you simply want the option to live in a comfortable home, pursue hobbies, and spend time with loved ones.
No matter what your retirement plans look like, a solid nest egg could make them possible. And the good news is that you don't need to dump hundreds of thousands of dollars into your 401(k) or IRA to get there. These three moves, in fact, could turn $100,000 in contributions into $1 million by the time your senior years roll around.
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1. Buy dividend stocks
Dividend stocks offer two opportunities to make money. First, there's share price appreciation. Over time, the value of your stocks can grow, leaving you with more wealth to enjoy.
But also, the dividends you receive from those stocks represent money you can, and should, reinvest from year to year. Doing that will help you grow even more wealth -- without having to lift a finger (this especially holds true if you set up your dividends to get reinvested automatically).
2. Buy index funds
Index funds are passively managed funds whose goal is to match the performance of different benchmarks. And while they won't be your ticket to beating the market, they could help you generate some pretty strong returns in your IRA or 401(k).
Another perk of index funds? They take the guesswork out of investing. If you're not all that skilled in analyzing individual stocks, you don't have to sweat it. Index funds effectively let you own bunches of stocks at a time, only without having to do much research. They also lend to diversification, which is an important thing on the road to growing wealth.
3. Invest in real estate
As mentioned, it's a good idea to branch out in your portfolio. And real estate could be your ticket to doing just that.
You can't go and invest your IRA in an income property (you can buy one separately, but that assumes you have the capital and appetite for risk). But what you can do is load up on REITs, or real estate investment trusts.
REITs are companies that operate different properties and derive revenue from tenants. What's great about REITs is that they're required to pay a minimum of 90% of their taxable income to shareholders as dividends. As such, those dividends tend to be generous.
But also, the value of REIT shares can rise over time -- especially if you put your money into growth-driven sectors. And that could leave you very wealthy over a longer investment window.
Get ready to enjoy your dream retirement
You may have the goal of retiring with $1 million -- or more. But that doesn't mean you have to contribute $1 million to your retirement account. All you really need to do is choose your investments wisely and stay invested over multiple decades. If you stick to that plan, you may be floored by the amount of money you end up accumulating.
