3 Tools Rich People Use to Grow Their Wealth

Have you ever looked at someone you know with a lot of money and wondered how they got there? Maybe they got lucky -- say, they ran with a unique business idea and it wound up being successful. Or maybe they inherited some of their wealth through family.

But you should know that many people who end up with a lot of money get there by making savvy choices. And that includes using the right wealth-building tools. Here are three you may want to take advantage of.

1. Traditional IRAs

When you contribute to a traditional IRA, you're committing to saving and investing for retirement. But the tax savings you enjoy in the course of doing so make it easier to grow wealth.

Traditional IRA contributions are tax-free, so by funding one of these accounts, you're shielding some income from taxes. That's money you can invest for added wealth.

So for example, if you put $5,000 into a traditional IRA, you won't be taxed on $5,000 of earnings. If you fall into the 22% tax bracket, that's $1,100 in savings. If you take that $1,100 and invest it rather than spend it, you can grow even more wealth. It's that simple.

2. Roth IRAs

The money you contribute to a Roth IRA won't give you an immediate tax break. But you should know that investment gains in a Roth IRA are tax-free, and that alone opens the door to a lot of wealth-building opportunity.

Let's say you contribute $250 a month to a Roth IRA over 45 years. The stock market's average return over the past five decades is 10%, as measured by the S&P 500. If you score that same return in your Roth IRA, you'll end up with a balance of about $2.15 million -- but you'll have only put in $135,000 of your own money. So all told, you're looking at a $2 million gain that the IRS can't touch.

3. HSAs

HSAs, or health savings accounts, combine the benefits of traditional and Roth IRAs. Contributions go in tax-free, and investment gains are tax-free along with withdrawals taken for qualified medical expenses.

And yes, HSAs are specific to healthcare costs. Withdrawing from an HSA for another reason could result in a costly penalty. But there are two caveats there: First, healthcare is a perpetual expense, so think of an HSA as the same thing as having a prepaid supermarket debit card. You know you need to eat, so that prepaid card is akin to having cash. HSAs are similar in the context of healthcare spending.

Also, while you'll generally be penalized for tapping an HSA for non-medical withdrawals, once you turn 65, that penalty goes away. At that point, your HSA will work like a traditional IRA in that you can take distributions, but you'll pay taxes on them.

People who are rich don't always simply get lucky. Many work hard and use the right tools to gain wealth over time. If you want to build up your personal finances and join the ranks of the wealthy, make sure to save for retirement and healthcare in a tax-advantaged account like the ones discussed above. That way, you can enjoy a world of tax breaks in the course of your investing career.