Born between 1979 and 2000 and want to retire wealthy? Read this now

A boy kicks a football during a game with his family
A boy kicks a football during a game with his family

In the UK, we have a variety of excellent tax-efficient savings and investment products that could potentially help you retire wealthy. One particular product that I hold in high regard is the Lifetime ISA, which is only available to those aged between 18 and 39. Here are three key reasons this investment vehicle could help you retire wealthy if you're lucky enough to be born between 1979 and 2000 and are eligible for it.

Government bonus

The first main attraction of the Lifetime ISA is the generous 25% bonus on offer from the government on contributions of up to £4,000 per year, up to age 50. Contribute £1,000 and you'll receive a bonus of £250. Pay in £4,000 and the government will pay you an extra £1,000. There are no complicated forms to fill in and the bonuses normally arrive in your account within weeks - it's that simple. It's not rocket science to realise that receiving these kinds of bonuses on your contributions could turbocharge your wealth pretty quickly. The sooner you open an account and start contributing, the more you could potentially benefit.

Tax-free

The next main advantage of this ISA, is that just like the Cash ISA and the Stocks & Shares ISA, this investment vehicle is tax-free. Any capital gains, dividends or interest you generate are yours to keep - you won't have to hand over a slice to the taxman. This is a significant benefit that shouldn't be ignored. Over the long term, paying no tax on your gains could boost your retirement pot significantly. Make a £5,000 capital gain on a stock? That's yours to keep. Pocket £2,000 in dividends for the year? Again, all yours. The less tax you pay over your investing career, the more chance you give yourself of retiring wealthy.

Access to world-class investments

Third, with a Lifetime ISA, you'll have access to a vast range of funds, ETFs, stocks and other investments, although the exact range is likely to depend on your provider.

For example, through a Lifetime ISA, you could invest in the Fundsmith Equity Fund, which invests globally and is one of the most popular funds in the UK right now. Over one, three and five years it has returned an incredible 19%, 98% and 165%, although past performance is no guarantee of future performance.

Alternatively, through a Lifetime ISA you could pick a portfolio of stocks yourself. Whether your preference is for large-cap stocks like Royal Dutch Shell or smaller companies such as Boohoo.com, through a Lifetime ISA you can profit from these kinds of companies, tax-free.

The catch

Of course, while the Lifetime ISA has considerable benefits, it also has its drawbacks. One is that your funds cannot be withdrawn without a sizeable penalty before you turn 60, unless you use the money to buy your first property. It's important to fully understand the product before you start contributing. Yet overall, this ISA certainly has the potential to boost your wealth. If you aspire to retire wealthy and you're eligible, it could definitely be worth checking out.

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Edward Sheldon owns shares in Boohoo Group. The Motley Fool UK has recommended boohoo group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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