Individual Retirement Accounts (IRAs) and HSAs are powerful tools investors can use to save and invest for retirement or qualified medical expenses, all on a tax-deferred basis. Many investors only open one IRA or one HSA account, not realizing they can open as many HSA and IRA accounts as they desire – and the potential benefits of doing so are nothing to overlook.
You can further the autonomy of your retirement account by opening a self-directed IRA or HSA. Self-directed accounts allow you to invest in nearly any asset you desire (with the exception of life insurance and collectibles). Self-directed IRAs or HSAs expand your investment horizons outside of the stock market and into any asset market in which you may already have knowledge and experience.
All HSAs and IRA account types have a yearly contribution limit that encompasses every IRA or HSA account you own; meaning your contribution limit remains the same regardless of how many accounts you open. However, there are strategic benefits to opening multiple retirement and HSA accounts. Multiple accounts allow you to maximize investment opportunities and diversify your retirement portfolio. Investing in more than one asset class provides autonomy from the potential volatility of any single asset market.
If it helps you to calculate potential returns for each asset, you may want to keep your assets in separate IRA accounts. Some investors prefer to open an IRA or HSA for every asset market in which they want to invest. Multiple IRA accounts can help you keep your assets organized in a way that makes sense to you. Additionally, if one or more of your IRA assets has more liability risk associated with it, your attorney may advise you to keep that asset in a separate IRA.
For instance, if you have an old 401(k) invested in publicly traded securities, you can keep some of the 401(k) funds with its current provider, and open a self-directed IRA with New Direction Trust Company to diversify and invest in alternative assets like real estate, private equity, or both – the combinations are limitless.
For HSAs, a tactic some investors may prefer is owning a “liquid” HSA with the amount of money he or she feels comfortable with, in the event of a medical emergency. With the money over and above the “liquid” contingency, investors can open one or more self-directed HSA accounts to invest in specific asset markets for long-term returns on a tax-deferred basis; thereby creating money for a lifetime’s medical expenses. Investors may have an HSA invested in stocks and bonds, and other accounts invested in precious metals or private lending; among many other asset options.