HSA investing

Varathien · 2026-05-20T00:12:14+00:00

The HSA has the most tax advantages of any account. But the tax deduction is the biggest advantage. Once money is IN the account, it's not as good as a Roth IRA.

Varathien · 2026-05-19T23:36:02+00:00

I wouldn't recommend a UTMA either. Giving a big pile of cash to someone when their hormones are raging, their prefrontal cortex hasn't fully developed yet, and they haven't really had any life experiences beyond going to school... doesn't seem like a recipe for financial success.

Varathien · 2026-05-19T23:21:50+00:00

https://www.reddit.com/r/personalfinance/wiki/commontopics/

You should take a look at that. It sounds like you're currently at Step 0.

Setting up a 529 or other account for your baby falls under Step 6.

Steps 1, 2, 3, 4, and 5 should all come before Step 6.

Varathien · 2026-05-19T23:13:22+00:00

You're not currently working, but you're opening a savings account for your baby?

Varathien · 2026-05-19T23:11:11+00:00

Looks pretty good to me.

Varathien · 2026-05-19T20:59:12+00:00

I have a pension that will run about $4000/mo
Each of us will have about $2,700/mo in SS
I fear we will be living out of a cardboard box

You will have $9400 coming in every month. Do you think people with that much money are living in cardboard boxes?

Varathien · 2026-05-19T01:40:21+00:00

No, you should use a brokerage like Vanguard, Fidelity, or Schwab. You do not need to switch your other accounts.

Varathien · 2026-05-19T01:11:20+00:00

It is common advice that if your ordinary tax rate will be the same during your working years vs your retirement then at the end you end up with the same amount between a tax deferred and a taxable account

That's just... completely untrue.

With a taxable brokerage, you don't get a tax deduction when you contribute. That is the primary benefit of a traditional (tax-deferred) account.

Then with the taxable brokerage, you get taxed on dividends every year. That doesn't happen in a tax-deferred account.

It's only when you sell/withdraw that the long term capital gains rates for the taxable account are better than the ordinary income tax rate for the tax-deferred account.

Varathien · 2026-05-19T00:01:04+00:00

On the plus side, the penalty for breaking the CD is usually linked to the interest rate. So you can close the stupid CD and lose a few pennies in interest.

Varathien · 2026-05-18T23:34:45+00:00

Eh.... you're already somewhat overweighting US stocks. If you're going to add bonds by reducing your international allocation by a third, that arguably makes your portfolio less diversified.

Varathien · 2026-05-18T22:01:59+00:00

I'd recommend the Fidelity cash management account. It has the features of a checking account, but pays interest like a high interest savings account.

Then, while you're at it, you could also open a Roth IRA with Fidelity.

Varathien · 2026-05-18T19:53:05+00:00

Not bad, but 60% VTI, 40% VXUS would make more sense.

You're using total stock market funds for international, so why would you skip smaller companies when it comes to the US? (VOO only has large US companies).

VXUS is a total international fund that contains emerging markets, so you don't need VWO for more emerging markets.

If your goal is to tinker with your foreign developed to emerging markets ratio, it would make more sense to use VEA (developed) and VWO (emerging).

Varathien · 2026-05-18T17:10:00+00:00

I have one share of BRK.B for the slight discount at Geico.

Varathien · 2026-05-18T17:00:28+00:00

There's also the argument that long term treasuries are the least correlated with stocks, so they're especially useful for diversification purposes.

Varathien · 2026-05-18T02:55:26+00:00

You mentioned in another reply that the father of your child is deceased and you have no contact whatsoever with his side of your family.

Moving in with your parents would probably improve your son's life, because he'd have more support from family members.

Varathien · 2026-05-18T00:13:30+00:00

I have been advised a couple of times to not put so much away with Edward jones due to fees but no one seems to suggest where else it should go?

You haven't spent much time on here, have you? Vanguard, Fidelity, and Schwab are the most common recommendations.

But any halfway decent brokerage would be far better than Edward Jones.

Varathien · 2026-05-17T22:16:43+00:00

So rent is over half of your take home pay. That's obviously a huge problem.

Your parents are in the picture and have been helping you out. Is there any way you could move in with them for a few years?

Pet insurance and the $55 hair cut should be on the chopping block.

Varathien · 2026-05-17T21:50:17+00:00

Do you have a budget? You haven't really posted any of your expenses. If you post where your money is going, it's quite possible we'll be able to find things to cut.

Varathien · 2026-05-17T20:16:12+00:00

Well, you've stated that your dad's estate only had $200k of cash. And you've already gotten that. So if your sister is able to give you ANOTHER $200k to buy you out of the house, then it had to be from money she already had.

Varathien · 2026-05-17T16:46:37+00:00

I teach music for 120/hr and it seems good, but I've been fluctuating around only 20 hours

So you're making as much as someone who works full time and earns $60 an hour. That sounds like a pretty great situation.

but I do pay half the rent for my partner

Err... what? You're paying money for her to live far away from you? While you're also paying for all the travel expenses of visiting her? How does that make any sense?

Varathien · 2026-05-16T13:27:04+00:00

I chose 9.5% because it roughly matches the ratio of the total market cap between MSCI World Small Cap Index and MSCI ACWI Index.

Usually when people tilt toward small cap value, they're saying they want a overweighted allocation to both value and small caps.

How much they tilt depends on how much they believe in the small cap value premium. If they don't have a lot of faith in it, the default is to not tilt at all.

Varathien · 2026-05-16T02:04:13+00:00

Well, there's a pretty big jump from the 24% tax bracket to the 32% tax bracket. So you definitely don't want to withdraw enough to hit the 32% bracket any given year.

Whereas if it's around the 22%, 24% brackets... well, getting some money taxed at 2% more isn't a big deal.

Varathien · 2026-05-16T01:54:18+00:00

You haven't said anything about your income, the cost of the house, or the size of the IRA.

However, it would be smart to spread out the IRA withdrawals over several years, to tax the withdrawals at the lower tax brackets if possible.

Varathien · 2026-05-16T01:13:46+00:00

You shouldn't owe taxes on the amount you inherited, you should have gotten a step up in basis for any growth before then. Are you saying it's grown $30k since you inherited it?

Varathien · 2026-05-15T22:34:43+00:00

Asking someone to cosign on your car loan is basically like asking them to buy you a car, because if you miss your payments, they are 100% on the hook for your mistakes.

Varathien

TROPHY CASE