Ask HTM - Too Rich to ‘Buy Nothing’, Small Cap Value to Maximize Returns, & Spending HSA Funds on Anything #775
Jan 15, 2024
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Topics discussed include the benefits of Health Savings Accounts for tax advantaged investing, the affordability of leasing a car, maximizing investment returns with small cap value funds, and the ethics of participating in buy-nothing groups.
Participating in buy-nothing groups can be justified even for those with larger incomes if the items obtained would otherwise go unused and add value to their lives.
Having a fully formed investment plan and focusing on increasing savings rate are impactful strategies to grow wealth, while the choice between small cap value funds and S&P 500 index funds depends on individual preferences and risk tolerance.
Opening a health savings account (HSA) can maximize tax advantages by using funds for current medical expenses and investing for future growth, with the flexibility to use the funds for various purposes beyond healthcare.
Deep dives
Utilizing Buy-Nothing Groups with a Higher Income
Joe, a listener from Minnesota, wonders about the ethics of people with larger incomes participating in buy-nothing groups. Despite his high income as a healthcare professional, Joe still embraces money-saving practices like picking up extra shifts, card hacking, couponing, and selling items online. He values saving money on principle, even if it's just a few dollars. While he wonders if he's taking resources away from those who can't afford them, he believes that obtaining items from buy-nothing groups that would otherwise go unused adds value to his life and makes efficient use of resources.
Navigating Small Cap Value Funds
Quay seeks advice on small cap value funds and their potential for higher returns. While one of the podcast hosts leans towards investing in small cap value funds based on Paul Merriman's expertise, the other host prefers sticking to S&P 500 index funds. They emphasize the importance of having a fully formed investment plan, understanding the risks involved, and being consistent in one's investment philosophy. Both hosts also suggest focusing on increasing savings rate as a more impactful strategy in growing one's wealth.
Investing in an HSA for Future Expenses
Chris, from Pennsylvania, is considering opening a health savings account (HSA) when switching to a high deductible health care plan. He wonders about the long-term benefits and uses of an HSA. The hosts explain that the main goal is to maximize the tax advantages by paying for current medical expenses out of pocket and investing the HSA funds for future growth. They clarify that HSA funds can be used for various purposes beyond health care, but it's crucial to keep track of receipts for future reimbursements. They also discuss the potential retirement benefits of an HSA and its flexibility in timing withdrawals.
Importance of Living Close to Work
Living closer to your job can reduce costs and stress, making it a wise long-term decision.
The Disadvantages of Leasing a Car
Leasing a car is generally not a good financial decision, as it can be costly and limit long-term financial opportunities. Rather, considering a well-maintained used car may be a more sensible and cost-effective choice.
Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - What’s the point of sticking money in a Health Savings Account?
2 - Does it make sense to lease a car since I’m so dependent on my vehicle for work?
3 - Should I consider small cap value funds in order to maximize investment returns?
4 - Am I too well off to snag free items from a Buy Nothing group?
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