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Our Rich Journey – HSA Accounts – How to Invest Them for Financial Independence (The Secret Early retirement account): We’ve talked about Health Savings Accounts (HSAs) in previous videos, but we’ve never done an in-depth video about what an HSA is, the triple tax benefits of an HSA, how to hack HSAs for financial independence, and how we invested in our HSA . . . until now! In this video, we go into detail about all things HSA! If you haven’t invested in an HSA and are interested in learning more, this video is for you. 🙂 HSAs are in incredible way to invest on your journey towards financial independence, so check out this video and consider whether an HSA fits into your FIRE plan!
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HSA Accounts: How to Invest Them for Financial Independence (The Secret Early retirement account)
In the quest for financial independence, many people are on the lookout for effective investment strategies that offer tax advantages and provide a path to early retirement. While there are multiple retirement savings options available, one often overlooked vehicle is the Health Savings Account (HSA). Often hailed as the secret early retirement account, HSAs offer a unique combination of tax benefits and potential investment growth.
HSAs were originally introduced in 2003 as a way to help individuals offset the high costs of healthcare. These tax-advantaged accounts are available to those who have a high-deductible health insurance plan.
The primary benefit of an HSA is its triple tax advantage. Contributions made to an HSA are tax-deductible, the funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This trifecta of tax advantages makes HSAs stand out among other retirement savings vehicles.
But what makes an HSA truly extraordinary is its potential for investment growth. Unlike traditional retirement accounts where funds are typically invested in mutual funds or stocks, HSAs allow investors to choose from a wide array of investment options, including individual stocks, bonds, and exchange-traded funds (ETFs). By investing these funds wisely, you have the opportunity to grow your HSA balance significantly over time.
To make the most of your HSA, it’s crucial to adopt a long-term investment mindset. While it may be tempting to use your HSA funds to cover immediate medical expenses, consider paying those expenses out of pocket whenever possible. By doing so, you can let your HSA balance continue to grow through investment returns.
When investing your HSA funds, it’s important to strike a balance between risk and reward. Diversify your investments to mitigate risk and ensure that your portfolio aligns with your investment goals. You can seek the assistance of a financial advisor who can help you determine an appropriate asset allocation strategy tailored to your risk tolerance and retirement timeline.
Another aspect to consider is maximizing your contributions to your HSA account. The higher your contributions, the more potential there is for tax savings and investment growth. For 2022, individuals can contribute up to $3,650 to their HSA, while families can contribute up to $7,300. Additionally, individuals aged 55 and older are allowed to make catch-up contributions of an additional $1,000 per year.
It’s important to note that HSAs are not limited to individuals who are currently employed. If you have an eligible high-deductible health insurance plan, you can continue to contribute to an HSA even if you no longer have access to an employer-sponsored plan. By doing so, you can continue to reap the tax advantages and invest in your future with the potential for early retirement.
While HSAs are primarily designed for medical expenses, they can also serve as a viable vehicle for long-term wealth accumulation and financial independence. By investing wisely and maximizing your contributions, you can leverage the triple tax advantage and potential investment growth to secure a brighter financial future.
In conclusion, HSAs offer a unique opportunity to not only save for medical expenses but also invest for financial independence. With their triple tax advantage and potential for long-term investment growth, HSAs can be the secret early retirement account you’ve been looking for. So, explore the investment options available to you, consult with a financial advisor if needed, and start taking advantage of this powerful tool on your path to financial freedom.
Thank you for explaining the reimbursement part! I was not sure what was the purpose of them.
does the reimbursement apply to all HSA eligible purchases for any HSA account? that is, no time limit or physical/original copy of the receipt required?
You hit on something big with holding the receipts. I have been taking in a lot of content on personal finance and none of them have mentioned this detail Nice work!
YALL ARE REALLY OUT HERE DOING THE LORDS WORK. THANK YOU SO MUCH!
I just opened my HSA with Fidelity. I have to think how much I have to put in it.
Thank you so much for posting this informative video! Luckily, my previous employer contributed to an HSA account for me. I heard about using an HSA as an investment from a patient. I was looking at investment options with Ameritrade but I was scared to go for it since I didn't really hear anyone else talk about it! I really enjoyed how you both explained the benefits of utilizing HSA as an investment account! (:
Let me thank you first. Now my question is I don't have an HDHP but can I open an HSA account and contribute?
Thank you so much for you’re knowledge will be maxing out my HSA also my wife job has it and we max out are Roth IRA both of us and 6% matching 401k while we invest a lot in are acorn and Robinhood account voo sp500 and VTI schd
So why do you pay a premium?
Can someone clear something for me, if you get an HSA account, you must have hdhp healthcare plan, so if money is coming out of your paycheck for healthcare plan, why the need to put more money in an HSA?
I am mind blown!! I've had this account for years and never knew that I should be doing this. I just submitted a request to adjust my amount. I feel like this will increase my employer's contribution as well. Thank you so much for this information.
My wife and I are having a baby. Can she get a family HDHP and keep her HSA and I keep my own self HDHP account to keep my HSA? The reason I ask is because both of our employers have an HSA match. Thank you.
This was a great explanation of the HSA account. One reason many do not utilize the account is because they are thrown off by the term HDHP and the way it is explained in conjunction to an HSA. So many people are hell bent on getting that PPO plan they are used to when in reality an HSA qualified medical plan can be of any plan structure as long as it follows the rules of the HDHP.
I was just looking into HealthEquity, through them you can get an hsa and also invest to vanguard. Have you heard of them?
Great video and information!! You are spot on! My current employer does not offer a way to invest HSA funds, so I have to roll the funds out of my HSA account to an HSA account at a brokerage firm. This is a great way to save and allow your money to grow tax free!!
one question, how do you transfer the funds in the hsa into a brokerage account? the funds are sitting there but i've no idea how to move them
I know you did this a couple years ago. But heck I was not aware that you could ask for reimbursement of an expense several years down the line. I learned something new today, thanks.
The company I work for has only had High Deductable Health funds for the past 4 years, I have maxed out each year. Unfortunately the HSA provider that we are forced to use (Smart Choice) is horrid and the brokerage account we are forced to use (can't link it to my Fidelity account) only has high fee funds as eligible means that I am not getting all the advantages. I retire in about 1 year and on day 1 I will be moving that HSA to Fidelity so I can have better access to all the funds out there and can make much better choices.
How do you move the money from your HSA account into a TD investment account?
Real solid info. Thanks!
Great information.
Are you allowing the moneybto compound over a year then investing it? How long are you compounding before you start to invest?
i dont understand the point of keeping the receipts. You keep the bill to get a reimbursement from the HSA account 15 years later, but do you really need the receipt to withdraw money after 15 years? Couldnt you just take it out without the receipt?
Thanks you in advance!
I just set up an Hsa account with my job now how do I connect it with a brokerage acct
What happens if you set up an hsa plan then you stop working? Does it continue growing or do you have to pull out?
Ive been doing everything yall said except the receipts. I will be making that adjustment.
Thank you for the post neighbor and many blessings in return
So can I save all my medical receipts then reimburse myself when I'm 65 years old?
can you keep injecting money into the HSA and investing through it when you're not employed anymore once it's been opened and set-up?
what if your employer picked the partner bank for the HSA and that one doesn't allow to use it as an investment account?
So how much of your HSA money did you invest? All of it? And if so after investing did you re-max out the HSA afterwards? Somebody help answer this plz.
I'm missing the connection between linking the HSA to a brokerage account. What exactly is done and how?
I have always had medicaid ever since I was little and now that I'm an adult, my kids have medicaid as well. Do I have to unenroll from medicaid to open an hsa account? Do I have to unenroll my children as well or can they stay on medicaid while I contribute to an hsa account??
thank you for this. love the tip on the hsa hack at the end!
How does this work when you become ill…like cancer?
Hi could you do an update to this video? Looks like some of the numbers have changed. If you were just starting now, would you suggest these same index / etfs or would there now be better ones (to include the vanguard, Schwab and Fidelity indexes in your “How We Became Millionaires with Index Funds” video). Thank you both for y’all your valuable information!