Health Savings Accounts (HSAs) are becoming increasingly popular for investors looking to save money and help cover medical expenses. Most investors don’t realize that like other IRAs, an HSA
can be used to invest in alternative assets. This includes gold
and other precious metals.
HSAs enable you to save on medical expenses in several different ways. You can make pre-tax contributions to your HSA, and withdraw that cash tax-free when you need to cover qualified medical expenses. Anyone can make contributions to your HSA—and you can contribute to anyone else’s—until the contribution limit is met.
HSAs even allow the 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 onto 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 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.
The Bottom Line
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.