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One of the most significant benefits of an IRA is that it allows your investments to grow without immediate tax implications. In contrast, traditional savings accounts require you to pay taxes on interest earned, as well as on dividends and capital gains when you sell investments. This means that with a regular savings account, your earnings are subject to taxes every year, reducing your overall returns.
With an IRA, all income generated—whether it's interest, dividends, or gains from asset sales—does not incur taxes in the current year, allowing your investments to compound more effectively over time. The only time taxes come into play is when you start withdrawing funds from the account, usually after retirement.