Two-Cent #008

HSAs, Building People's Confidence, & The Common Sense Investing Strategy
October 13, 2020

October 13, 2020

Two-Cent #008: 

HSAs, Building People's Confidence, & The Common Sense Investing Strategy

Greetings Y'all. Welcome back to Two Cent—where it's my job to uncover the tools that help us grow as humans.


Social Dilemma is whack and everyone could benefit from watching it, okay moving on.


This week we're talkin extra tax-advantaged growth, self-esteem, & the founder of index mutual funds.


The Skinny:


🏥Health Savings Accounts: HSAs supercharge your tax-advantaged investments if you know how to use them

☝Building People's Confidence: Practical strategies to boost self-esteem (especially in kids)

📈The Common Sense Investing Strategy: Jack Bogle's best creation and why it beats most investors.

🏥 Health Savings Accounts


HSAs are traditionally used as savings accounts to pay for health and medical related expenses. Your company probably offers one. 

They are commonly held by a brokerage firm where you have the option to invest the money as well. I use Fidelity's HSA

However if you pay for expenses out-of-pocket, leave your HSA invested in the market, and save your receipts for retirement you get triple tax benefits. 

How do you get triple tax benefits?

  • HSA Contributions are tax deductible ($3500/year for individuals in 2020)
  • Money grows tax free (@ 10-12% compounded annually in an S&P 500 fund)
  • Withdrawals are tax free (up to the total amount in receipts you've accrued)

Here's a clip from the official IRS page on HSA's.


Screen Shot 2020-10-13 at 5.04.39 PM.png



Bottom line: 

Open an HSA, pay as much out-of-pocket as you can, keep your money in the HSA so it compounds tax-free, & save all of your receipts so you get tax-free withdrawals when you retire. 

Learned this strategy from the book, The Simple Path to Wealth.

Check with your employer to make sure you can qualify. 

☝ Building People's Confidence 


Everyone knows someone who, when being around them, makes everyone else feel better about themselves. 

Knowing how to build people's confidence around you is key to being a successful manager, teacher, parent, friend, and partner.

It's really a key to being a successful human.

So what practical strategies can we use to bring out the best in people?

Here's 3 that I've found insightful:

1Give people/kids something they can't do, support them to work hard until they find they can do it, then repeat. (Randy Pausch, The Last Lecture, on building self esteem)

2Praise kids for hard work and effort rather than smarts and ability. Praising for effort gives children a variable they can control, but emphasizing natural intelligence gives the child no good way to respond to failure. (Peter Brown, Make it Stick)

3. Base aesthetic compliments on concrete features people can't control to solidify their self-confidence.

📈 The Common Sense Investing Strategy


Jack Bogle, founder of Vanguard, created the index mutual fund in 1976. 

In his book, The Little Book of Common Sense Investing, he argues that buying and holding low expense ratio S&P 500 Index funds is the best investment strategy for 99% of people. 

He says "You don't need to think about it or do any research and you'll beat most investors."

The all time rate of return hovers around 10%/year, in the last 10 years it's more like 13%/year. 

You're basically investing in the American All-Star team of business. 

It's not just Jack, Warren Buffet also said on CNBC

"Consistently buy a low cost S&P 500 Index fund... I think it's the thing that makes the most sense practically all of the time"

Some principles to consider: 

  • Always reinvest dividends (you can automate this on most platforms).
  • Avoid timing risk by dollar cost averaging.
  • If you don't know what compound interest is, get a primer here. It's the magic that makes investing so fun.

I use Fidelity because they have zero expense ratio S&P 500 Index Funds (FNILX).

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