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Comment by basch | Hacker News Reader

>putting money in to ETF’s until I have enough in the ETF’s I’m willing to by some individual stocks which may not be as stable as the ETFs I have.

Are those retirement accounts or taxable brokerage. Because for many people, maxing out their IRA, 401K, and HSA is like 35K a year alone, and putting money into taxable brokerage should take a backseat unless 1) you like the gambling for its entertainment factor 2) you choose to keep your short term savings / emergency cash in the market (*I much prefer a combination of 6 months savings invested a little riskier than it should be + a large line of credit. Then you have the choice of selling stock or borrowing at 10% APR, for something you can hopefully pay off very very soon. A 15K LOC at a credit union is a godsend.) But other than my asterisk, taxable investments are usually an inefficient use of funds. 401K match and HSA are top priorities.

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Maybe I'm missing something, but HSAs seem to me to usually only be available if you have a high-deductible health insurance policy. That can be OK if you're 25 and very healthy, but for many other people is a high risk.

HSAs are a no brainer if you can afford to spend the out of pocket maximum. Either you pay the insurance company more in monthly premiums for a lower deductible, or you pay a lower monthly premium and invest the difference in an index fund and you keep the returns. Which grow tax free in an HSA.

Your probability of having a healthcare expense does not change based on the type of insurance you choose (high or low deductible). Only the timing of the cash flow. But the government gives tax advantages for using an HSA. It's an IRA with the ability to withdraw penalty free any amount you used for healthcare anytime you were covered under an HDHP.

Its a Traditional IRA that doesnt tax growth. Its tax free going in, on its gains, and going out. Theres really nothing like it.

Best case scenario, spend all your health care with cash. Let the HSA grow as long as you can. Reimburse yourself for a decades worth of health care spending when you need the cash.

If you switch to say an HMO or PPO plan can you still use your HSA for out-of-pocket healthcare costs as you can an FSA? If not, what happens to your HSA/what can you do with it?

HSA is yours to keep forever. I recommend using Fidelity, no fee and access to all the best investment options. You should transfer all funds from an employer sponsored HSA if it's not Fidelity to Fidelity.

Any medical expenses you incur while you have a qualifying high deductible health plan (HDHP) can be expensed anytime in the future from your HSA. What I do is invest all of the HSA funds, and pay for all of the medical expenses with after tax money. I pdf all of the receipts for the medical expenses, and now, if ever in the future I need cash, I can withdraw it from the HSA penalty free since I have proof of the medical expenses. If you don't end up having medical expenses (good luck), and you turn 65, then you can withdraw and pay regular income tax like an IRA/401k (if you need the cash, you should of course use up your IRA/401k first).

I don't even understand how the government plans to prevent fraud if people decide to claim the same health expense multiple times, as you only have to keep tax records for a few years, and the law as it currently is lets you deduct health expenses from anytime in the past at any point in the future.

The downside is that putting money into those makes it harder to withdraw for when you do need those funds. Savings accounts makes it much easier to pull available funds. Other than that, you're right.

Thats what the line of credit is for. When you need immediate money, dont want to cash out stock, can pay it back in a month, or to give you a month to park it somewhere with a lower interest rate.

You can spend out of a brokerage account as if its a savings account. Sell your stocks, and youll have cash.

Another thing is that 401k and IRAs might not be great for someone hoping to retire early because of the early withdrawal penalties.

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