This content was created by MARK KOHLER. This content was uploaded by MARK KOHLER. This is a YouTube video titled "What is a Health Savings Account? Learn What You Can or Cant Do with an HSA!" (posted May 4, 2021). The excerpt is a conversational Q&A featuring MARK KOHLER and Matt, with audience questions from Daniela and Jason Brown. They discuss HSAs and self-directed accounts, practical investing advice (start with ETFs/S&P 500, Roth/IRA basics, Peter Thiel example), and rules/prohibited transactions (illustrated by a humorous example about holding cows in an HSA and using IRA-owned rental property).
Chapters
Foreign. Jason Brown's question here is classic. Okay, but I want to answer Daniela's too. She goes I want to self direct but I don't know what to do. What if I have a savvy custodian? Daniela, your cast, your custodian is not going to tell you what to invest in. That's the point of self directing. So do this. Just start with a TD Ameritrade or a Scott Trade Roth and just buy some ETFs. They're called exchange traded funds. Warren Buffett is a huge fan of just buy some Fortune 1000.
Yeah, even you know, Warren Buffett basically has challenged hedge fund managers and he'll donate like a million bucks to the charity of their choice if they can just beat the S&P 500 after taking an account for their fees. So everyone could go buy the S&P 500 fund. Go by spy that it's an ETF. Basically it's so. But and even what's his name? Tony Robbins, the you know, book, you know, that's his point is it's like everybody's trying to beat the market. Just go buy the S&P 500 fund. And so if you don't know but you want to get in a habit of saving and you don't want to get.001% of the bank, then invest in something just like an ETF or index fund if you and get that habit of saving. But if you really want to build have a successful retirement account, you want to be actively involved in finding opportunities whether it's in whatever you're good at.
Look at Peter Thiel. Peter thiel that started PayPal, one of the founders used his Roth IRA now estimated to be worth more than $100 million a billion. It's oh yeah, is it billionaire now? But here's the thing, you just get started and start educating yourself, Daniela. And start saving. That's the first thing. If you're saying well I don't know what to invest in, I'll say how much you got?
Nothing.
Well start saving first. Then we'll get to what to invest in. And so there's lots and lots of options. And self directing is a part of the path to wealth because you're going to invest in what you know best. Now Jason Brown's question. I want to buy 4 black face Angus cows. Pretty cool. I'm with you. If they each have a calf. And now I have eight total cows and I eat one. Do I pay tax on what I eat? Okay, now Jason, here's the Problem?
Yes, that would be. That would be a distribution.
Yes. So this is good. Okay, let's do this. I'm not kidding. Some of you are like, Mark, you're full of crap. I'm going to show you a valid. This is legit. This is a picture of my cows. Now, I don't think we can. I don't know if we'd be able to see. Look at it. There's me with my cowboy hat in the sunset. I know some of you think that looks like John Dutton from Yellowstone. Some say I look like Kevin Costner at times. But no, it was me. And those are my cows in my health savings account. So. But Jason. Let's do this, everybody. This is legit. This is serious. Let's say this is Jason and this is Mark. Me and Jason goes out and buys eight cows or. Well, he bought four mother cows and they had four. Four calves. So he now has eight cows. All right, well, when he sells a cow or goes out and eats it or whatever, you know, barbecue, whatever, this is personal. So if he sells the cow and makes money, he's going to pay taxes and he can butcher a cow whenever he wants, or he can continue to build the herd. Me, I can't do that because I took my money and I didn't buy eight cows. I funded my health savings account. My HSA opened an llc, and my LLC went and bought five mother cows who have now had their calves. We're going to go on location tomorrow at the summit. I'm going to show them to you. And now I have 10 cows. I can't butcher a cow and eat it because it's not mine. It's my HSAs. This is called a prohibited transaction. And Matt teaches us a whole chapter in his book on what you can, cannot do. So Jason's probably joking around, but Jason is right. I would have to sell the cow. I could sell it to Matt. Yeah. Matt could buy the cow. Yeah. Butcher it, have a barbecue.
Yeah.
So he has a barbecue. But the money he paid goes to the llc. The LLC puts it back in my hsa, and I can go pay for my health care tax free. And I didn't pay any tax on that transaction. So Jason's question is actually maybe a play on words. It's funny and all that, but it's a really good example that you can't benefit from what's in your HSA or ira. Yeah, I've got to sell it first anyway. Sorry. Yeah.
Another one would be, let's talk about the rental property. You know, let's say you own a rental property personally, or even maybe it's an Airbnb. Okay, well, you could stay in it if you want. You know, if you own it personally.
But if I do it with what type of account?
But if I do it with a. Let's say just a traditional ira, keep it pretty easy.
That's the most common ira. Okay?
But if you do it with your ira, you can't stay at that property.
So the IRA opens an llc, Right? And then I do a vrbo Airbnb.
Yep. All right. It could be a regular single family, whatever it is, but it's the. It's the rental property, okay? You can't use that property. Just like you can't eat the cow, all right? This is not you. You don't own this. Your retirement account does. And there's a set of rules that make you stay kind of at arm's length between it. So it's just a good investment. You're not buying this property to have use of it or benefit of it. You're buying it because it's a good investment, because you want the rental income to grow up and build up your retirement account so you have a bigger retirement at the end of the day. So when the property appreciates, you have a bigger retirement account at the end of the day, as the gains go back.
