Last-Minute Shopping? Give the Gift of Financial Freedom

A 2-minute primer on the best use of a few thousand dollars.

Photo by Caley Dimmock on Unsplash

I know…The title is not very compelling. But if you’re reading this anyway, you’ve self-selected into a group that is driven to reach for financial independence. Good for you.

Why waste hundreds or thousands of dollars at Walmart when you can invest in your financial freedom? After all, isn’t early retirement the best gift ever?

An HSA investment is the best way that you can use your year-end bonus. Or that check from Grandma. Or (maybe) the money that was earmarked for your spouse’s big present.

An HSA contribution is the big-ticket gift that no one asks for, and almost no one thinks to give.

It’s timely. You should contribute before 12/31 for the contribution to apply towards 2019.

It’s on sale. Assuming you pay an Average American tax rate of 24%, for every $100 you put into an HSA you will get $24 back on your April 15th taxes. Spend $1000, get $240 back. And if you are in a higher tax bracket, you get even more back.

It doesn’t go bad. You can use it now, or next year, or 10 years from now; just let that money sit and grow. Invest it. Do whatever you want, it’s your money to spend on healthcare. If you happen to get appendicitis in 2022, the money will be there and ready to help cover your deductible.

It’s a gift that keeps on giving. Invest those dollars in stocks, mutual funds, ETFs, whatever your pleasure. The money will grow and compound year over year. If you’d invested $1000 in a Vanguard Total Stock fund last Christmas, you’d be up about $270 on the year.

It’s a retirement gift also! If you don’t use all of your HSA funds for healthcare, it turns into a big nest egg. At retirement age you can withdraw from it penalty-free and tax-free. Cha-ching!

Personal finance and investing is boring to most people; I get that. But making money the easy way is making money the best way. To drive home that point: last December I invested $6500 into an HSA. I got $2000 back at tax time for doing so. And through 2019 the account followed the general stock market and value grew by another $1700. Now I have $8300 of HSA value and another $2000 back in my pocket. Those are good numbers for so little effort.

Spend a few minutes researching HSAs, find it out if it’s right for you, and then get invested!

Doctor, Reader, Thinker

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