You guys it's my mom and Christina from our wrist trip today we're talking about HSA and in particular we're taking you to our HSA to show you how we're using it to invest for financial independence now most people don't know about HSA it's kind of a secret when it comes to using it for financial independence but if you're in a community fire if you're seeking early retirement you can get it.
Knowing the value of HSA today we're going to share with you our HSA we're gonna take you to our account and we're gonna show you how to invest in it so why come on said in today we're going to talk about HSA and we're really going to focus on our HSA account because then you don't know we've reached financial independence and retired early.
In Portugal and part of the access to financial independence that had to do with our HSA account was very useful in helping us get to financial independence, so we want to share that with you so that you can do the same thing right now, this conversation about HSA may be confusing in advance, but you have to wait for it because there's a hack at the end you see when most people from HSA think they're thinking about it as saving health, but they're thinking it.
The fire community talks about that they're using it as a retirement account that they actually invest the money they own in a mediation account and they're using this money to fund their retirement, so please stick around to the end because we're gonna show you the hack that people in the fire community use, so let's start with a quick definition of what they own is a health savings account or own it is like personal savings account that you can.
It can be used for investment, but it can only be used for eligible health care expenses. HSA accounts offering triple tax interest not heard in other accounts.
You didn't spend all this money on any other kind of expenses, so that's what's so amazing about having them. You put pre-tax contributions into your own property and then let them grow tax-free, and then the best part of that is that you can withdraw that money for qualified medical expenses and not pay any taxes.
What exactly is a high-discount health plan is a plan that has a higher discount than a conventional insurance plan with a higher monthly premium discount plan that is usually lower, but you end up paying more than a discount before your insurer starts paying it too, bearing in mind that there's a maximum pocket for discounts so you don't let out.
That's not to say that you're going to pay more than you have to go back to your insurance plan and find out what your insurance covers, so we were able to invest in HSA because we were enrolled in a high-discount health plan for our family of four monthly shares that was $ 300 per month, and we also paid a higher discount for our family of four members that was $3,000 per calendar year, so even though it was $3,000 per calendar year.
We had three thousand dollars per annual discount every year that we had this great thing known as the share pass premium where our insurer actually contributes 1800 percent per calendar year to an account that we also own, so that's actually amazing the pass premium is the free money that the insurer deposits into an account that your insurance earners have a contribution pass that can vary depending on how much.
In a plan that you're registered in, you just want to check that to see how much your insurance company will contribute to even a more observable one about HSA and the money that you put into your HSA is your money that you put through your share pass is also your money a lot of times in HSA gets confused with your flexible spending account with your flexible spending account.
But with the year that you don't use the money by the end of the year, it's moving into next year and next year next year, and that's what we're talking about, you can get the combined interest with owning them, and that money stays in your account forever until you decide to spend it so far that we've identified who owns them so we've talked about all in and the generalities of who owns them.
Using HSA savings accounts, they put the money in HSA's account, they let her sit there in the savings account, and then use it for medical expenses when that time comes, but what we did with HSA is the money that contributed to our HSA account. We tie this account to the brokerage account and we take this HSA money and we invest in the stock market now. Most people don't usually do this and I tell most people because I am.
People who were in my office, and I said first of all, did you have an HSA account, most of them didn't have an account, and I said,
- Do you invest your HSA money in your mediation account, and look at me like deer in the headlights?
- They had no idea they could do that until my mom's very personal study was aligned with the actual studies that were done?
Of these people who use HSA only 15 percent of these people use it as an investment account, so these statistics are astronomically low because of the people who are qualified, there are a lot of people who are missing out on this opportunity to develop their wealth. In HSA, your human resources financial adviser -- people don't talk about HSS -- they're talking about 401 thousand, and that's all you're throwing in.
They're telling you to also invest in IRA or IRA Dung, but they're not talking about owning them, because if you achieve financial independence you have to know about owning them and huge benefits, so let's go back to an account that we have even when we're investing in an account that we have Max from a contribution every single year and like safety said.
Just walk into any bank and use your HSA account and start investing in that there are only some banks in brokerages that can service our HSA trustees is with HSA Bank like Cristina said this account has been maximized ever since we opened HSA This is our right account ahead of you as you can see you can look at our past transactions when we were working and every one month we were contributing to our Hsa plus you can
Also, keep in mind that these contributions are also lowering our taxable income another benefit who owns it as we said very few people actually benefit from having them, and these people the majority of them simply save money in their accounts but we talk about this all the time on if you want to grow your money if you want to access
Financial independence you have to invest and that's the half we use with our HSA account instead of keeping it in an account and just letting it simply save money every year and we use that and the money we transfer to a brokerage account and we invest the whole of this account actually if most people just leave their money in the HSA savings account they will lose money for inflation but there's also a lot of money
Every single year and invest that money that is another way just to keep up with the cost of health care so let's go back to this six of our HSA so our HSA bank is connected to TD Emeritrad so we can't contact the vanguard always talk about how much we love the vanguard we always talk about how much we love the vanguard we are talking about
So we're connected to TD Emeritrad so let's go to this account and show you what it looks like so this is our TD Emeritrade account for this account as I said you can invest in any kind of equity investment that you want to invest in us invested in our basic Eashers Reed Etf has an account ratio of 0.08 so some of you might just ask why investing both of your eggs in this single reed basket basket
that we have a Vanguard account and we also have other stock accounts and those accounts are well diversified we're investing in total stock markets we're investing in sector ETFs in those other accounts but with this HSA account we wanted to invest in a REIT for two big reasons so the first reason is that REIT ETFs kick off incredible dividends so for this particular reach
we are collecting four point eight six in dividends and so
That's huge that's almost 5% in dividends that we're collecting off of this REIT and in addition to that we're also getting the appreciation of the REIT the second reason is that we wanted to hold a high dividend ETF in a tax-deferred account like an HSA you see it is more tax-efficient to have these type of holdings that kick off this type of dividend in a tax deferred account and if you're wondering how this Reid has performed year-to-date it has
Returned over 20% so this Reed is on fire it has been a really good investment for us so let's talk about the question of what we do when we actually get a medical expense well bihac and this is the part that we were alluding to earlier is that the money in your HSA is growing tax free and it is compounding so if we pay for our medical expenses out of our HSA we are taking away from that money they could be compounding so we don't pay our
Medical expenses with our HSA we actually just use the money from our normal savings accounts to pay our medical bills and then we keep that medical bill receipt and we hold on to it so this is the other half to the HSA like we said it is completely different than a flexible spending account because with an HSA if you save your receipt you can get Roberta reimbursed for that medical expense at any time so say we have a medical expense for three hundred
Dollars for glasses today another expense for two hundred tomorrow and another expense for two hundred to the next day and maybe we're having a lot of medical expenses but that's seven hundred dollars right so we don't take from our HSA account and maybe fifteen years down the line we have these three receipts totaling seven hundred dollars we allow our HSA account to grow and fifteen years down the line we pull out that reimbursement for our seven-hundred
Dollars by submitting those receipts that we received today tomorrow and the next day now on the other hand let's say we would have taken that $700 out today that is seven hundred dollars
they would not have had the opportunity to compound for the next 15 years that is the point that we're trying to make with these HSAs you see HSA is the value in them is not using them
the value of them is letting them compound year after year so that is the power of an HSA you treat it
Like a normal investment account you put money in there you allow it to grow long term and you handle other medical expenses in a separate account so that money in your HSA can compound and grow to huge amounts by the time either you're doing an early retirement or even a regular retirement so for us what we've done with all of those receipts is that we've scanned each and every one of them and we've uploaded them to the cloud and at some point if we need the
The money we're going to go to those receipts and offer to pay back the costs through our own but we have no plans to do what we're gonna do with our own is we're gonna let their own compound for 20 years and by the time they're 65 and he's about 20 years old that they have money that will be astronomical and we'll pull it out just like the traditional IRA you see when
You put together your fire plan you're gonna have all these accounts running in the background and your health and safety allocator that's gonna be a very strong account so just so strategically when you set it upkeep these kinds of things in mind so that it's a summary of the health and safety account triple tax benefits associated with their account and all the hacks associated with their account also if you're looking for fire or you're looking to achieve fire
Think creatively and you have to think outside the box as we said a lot of people who have access to a plan they have not even used it and for those people who use a plan they don't even invest properly in it they just use it as a normal savings account so if you are looking to achieve fire you should definitely look at an account they have for you to invest in