By reinvesting distributions from investments, you may be able to increase your account balance over the long term. Assuming a positive return on your investment, you will realize greater benefits from the power of compounding. This is the concept of earnings on earnings. Maximize Tax-Advantaged Retirement Plans. If retirement is one of your objectives, be certain to invest in an employer-sponsored retirement plan if you are eligible.
Most plans allow pretax contributions and tax-deferred account earnings.
Do not forget about IRAs either. When you retired, preservation of capital was a steadfast financial planning rule. However, because of inflation, you should be more concerned with preserving your spending power. To keep ahead of the game, you must take inflation and taxes into account for the actual amount of your investment return. Prepare for the Long Haul.