This is an annual recurring event on my actual calendar. These are the few financial things I make sure to take care of at the beginning of each year. To break them down:
• I’m almost always over the Roth IRA income limit, so I do a “backdoor” Roth IRA which consists of contributing to a Traditional IRA, then converting it to a Roth IRA. The max you can contribute to an IRA in 2024 is $7,000. (I have an article breaking down how to do a backdoor IRA on my website).
• HSAs have the best tax advantage of any account! Money goes in tax-free, investments grow tax-free, and money spent on qualified medical expenses is tax-free! I keep mine with Fidelity. I keep about $2K in cash to cover current medical expenses, the rest I invest in a target date index fund.
• Keep in mind putting money in an IRA or HSA alone doesn’t do anything. You have to take the second step and invest that money! I invest mine in index funds.
• My dead box is a Google Drive folder with a list of accounts and instructions to help unwind my financial life in the unlikely event of my untimely demise. I go through and update this every January. It’s amazing what changes over a year!
• The dead box is no good if no one knows where to find it, so I email my brother to remind him it’s there and how to get to it.
• They say that “numbers that are tracked improve”. I’ve been tracking my net worth since I was 20 when it was about $5,000. It dropped to -$5,000 by age 22, but today it’s about $4.9 Million.
My Roth IRA is currently worth about $138K and my HSA has $26K. That amount plus the annual contributions invested at an 8% rate of return will be worth over $1.8M in 25 years! If you’re new to any of this, I’ll be posting more about all this stuff over the upcoming month so stay tuned!
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Jeremy
