Health Savings Accounts (HSAs) are becoming increasingly
popular for investors looking to save money and help pay medical expenses. Most
investors don’t realize that like other IRAs, the HSA can be used to invest in
alternative assets such as gold and other precious metals.
HSAs enable you to save on your medical expenses because you
can make pre-tax contributions to your HSA, and withdraw those moneys tax free
when you want to pay for the expenses. Anyone can make contributions into your
HSA—and you can contribute to anyone else’s—until the contribution limit is
met.
HSAs even allow the HSA account-holder to pay themselves
back for bills paid out of pocket (provided paperwork still in hand and that
the HSA was opened prior to the medical expense). You can hold on to those
receipts for years, allowing the account to grow to its maximum potential
before using the funds to reimburse yourself for those expenses.
At the same time, you may have been considering the merits
of holding real physical precious metals such as gold and silver in a
retirement account. Holding precious metals in an IRA provides protection
against the erosion of purchasing power via inflation as well as the potential for
appreciation as hard assets.
A Gold HSA, then, will allow you to create a reoccurring
purchase plan with a metals dealer of your choosing to make specific bullion or
precious metals purchases at regular intervals. As your HSA accumulates funds,
it can buy more assets, potentially generating more money to pay for expenses.
This is called Dollar Cost Averaging.
Dollar Cost Averaging Basics
Dollar Cost Averaging has long been popular with mutual fund
investors, since this practice of buying the same dollar amount or same number
of specific items, at regular intervals, means that you automatically a bit
less when prices have risen, and you buy a bit more when prices have fallen.
In other words, over time these price fluctuations even
themselves out, enabling the investor to accumulate the investment at a lower
average cost, while also protecting against the risk that prices will drop just
after making a big lump investment.
What’s the bottom line to me?
Obviously, since prices — whether they be stocks, gold, or
foodstuffs — will tend to rise over time, the best investment strategy (provided
you knew what you wanted to buy and how much of it) would be to invest all the
funds now, rather than over time. Since this is a retirement account, however,
and therefore one is typically making annual contributions over a number of
years’ time, the “all at once” strategy may not be feasible.
The next best thing, however, is Dollar Cost Averaging—and
the Gold HSA utilizes the power of this principle in tandem with the practical
matter of accumulating hard assets such as gold or silver to your retirement
account.
