It’s hard enough to motivate yourself to save for retirement, but saving for your future medical costs? How responsible does a person have to be?
Thankfully, health savings accounts, or HSAs, are tools that make saving for future health-related expenses less painful. These accounts allow you to save money, but they also allow you to invest. With open enrollment coming up, an HSA might be something to consider.
“One cool trick is to invest the money in an HSA just like you invest in your IRA,” Victor Medina, a certified financial planner and founder of Palante Wealth Advisors in Pennington, New Jersey, said in an email interview.
Investing through an HSA
Think of your HSA as a home for your medical money. Just like a brokerage account or an IRA, you’ll need to put money into the account before you buy investments. Then, after you fund the account, you can start investing.
Some HSAs offer tools that help you choose your investments and provide automatic rebalancing, so your portfolio stays within your preferred allocation. Others allow you to select from specific investments, such as stocks, bonds, mutual funds and ETFs.
Whatever method you choose, investing your money through an HSA will likely allow it to grow faster than by saving alone. However, if your HSA is offered through an employer, you may have fewer options for how you can invest your money.
Take advantage of the triple tax benefit
Once you start investing through your HSA, you can begin reaping the rewards — one of the biggest being the triple tax benefit, Medina said.
“Another cool trick is that the accounts are triple tax-advantaged, which means …….