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I am looking for ways to save and invest money for retirement. So far I have

  • 401(k) - max.
  • Roth IRA - max.
  • High Yield Savings Account - Emergency Fund
  • Brokerage Account where I buy some ETFs - Leftover

I am looking specifically for ways to invest long-term. Are there any obvious choices I am missing which could give me any tax advantage, or is the only thing left for me to do to buy stocks/ETFs? Is this normally handled by a traditional IRA account?

Background: I don't have any debt, so this is really about maximizing profits. I don't have a Health Savings Account and none is provided with my Health Insurance.

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    Do you have access to a Health Savings Account? It's not really an "investment" but it is a tax shelter. – D Stanley Jan 22 '18 at 14:39
  • Thanks for pointing that out. No I don't have one and my Health Insurance doesn't offer one. I personally don't like the fact that it is tied to Health Expenses but that is only my opinion. I also did the math when choosing and it didn't seem to be a good choice (financially) with my current employer. – Daniel Jan 22 '18 at 14:51
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    @Daniel Two things (1) in retirement health expenses are likely to be a given; (2) Once you hit 65, the funds can be used for non-medical expenses. – JohnFx Jan 22 '18 at 14:59
  • I'd suggest thinking of money outside of the tax-advantaged 401k/IRA not as retirement savings, but as financial independence. There's a lot of freedom in having enough accessible money that you're not one or two paychecks away from disaster. I would (and did) go with mutual funds rather than a brokerage account. My one (long-ago) experience of brokers is that they try to suck you into active trading in order to make commissions. – jamesqf Jan 22 '18 at 19:10
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Your list looks pretty good (those are the four places I have my money!), as far as it goes.

However, "401(k)", "Roth IRA" and "Brokerage Account" are types of accounts, and don't specify how you invest your money within the accounts.

Thus, "this is really about maximizing profits" is only partially satisfied by your list, since it's perfectly possible to max out your 401(k) and Roth, and pump a bunch of money into a brokerage account and leave it all in Money Market funds.

Obviously, that doesn't maximize your profits!!! :)

That means you've got to decide your risk profile and invest (mutual funds, ETFs, individual stocks/bonds) within the 401(k), Roth and brokerage accounts.

  • It took me a couple readings of your answer to figure out the piece in bold was not actually a suggestion. Perhaps you could in-bold it and add a clause indicating their lower return. – Kevin Jan 23 '18 at 3:07
  • Yes, definitely true. I think I was asking more for categories and how the system works in general than for actual investment decisions. The idea of stocks/mutual funds/ETFs will be maybe topic of another question. But I agree, just letting it sit there is not a good idea. – Daniel Jan 23 '18 at 3:55
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I don't have a Health Savings Account and none is provided with my Health Insurance.

In a comment you made it sound like you could have chosen an HSA plan but decided against it. In your position with no debt and extra money to invest, I'd strongly consider switching to a health insurance plan that is compatible with an HSA. It would give you an additional $3450/year ($6900 if married) that you can put away which is triple tax advantaged: tax deductible when you put it in, grows tax free, and tax free when you take it out if used for medical expenses. In your case I would max out the HSA and invest it like you would an IRA. If you can afford to pay your healthcare expenses out of pocket for now, then save your healthcare receipts (for years) and you can take out all of that money when you retire tax free. If your employer offers multiple plans and one of them is HSA compatible, then consider switching plans.

  • It is true, that my employer offers different plans and some do come with a HSA. I calculated that I just need one treatment per year (=accident, etc.) to be worse off with an HSA than with my current plan which has no deductible and very low copay ($20 max) afaik. I maybe could save some money here but I rather not worry about the costs when going to the doctor. I know this is a not completely rational decision and I will definitely consider it next year. Thank you. – Daniel Jan 23 '18 at 3:49
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you asked about "saving and investing". One sure way to save is quite obvious but not mentioned so far: reduce spending. Every financial statement has two sides: income and expenses. Increasing income or decreasing expenses has the same effect on savings. That means not having a new car, new phone, new computer, reduce eating out, eliminate cable TV subscription - the typical things that consume a lot of money in a classic American budget.

  • Agreed, I am working on this in parallel. – Daniel Jan 23 '18 at 3:50
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In addition to the investments you listed, there are also Series I Savings Bonds and Series EE Savings Bonds. The interest is not taxed at the state level and can be deferred. If used for education, as opposed to retirement, the interest can be completely tax free. The returns are not great, but they are guaranteed by the US government which makes them a reasonable thing to have in your portfolio.

There is also what is typically called a back door Roth which allows you to work around the salary limits on a Roth IRA. My understanding is these work best when you have variation in your annual income (e.g., from bonuses) where you roll the traditional IRA money into a Roth IRA in years when your marginal tax rate is low.

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