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Investing Your Money for Maximum Benefit: A Guide from Oakwell Private Wealth Management

Investing your money is a key part of building wealth and securing your financial future. With so many options available, it can be difficult to determine the most efficient way to invest your money. At Oakwell Private Wealth Management, we believe that the following five investment options offer the most advantageous ways to invest your money when contributed to in this order: 

  1. 1. 401k: Up to Match   

If your employer offers a 401k plan with a match, this is the easiest and most beneficial way to invest your money. The match is essentially free money, and you should take advantage of it by contributing enough to receive the full match. For example, if your employer matches 50% of your contributions up to 6% of your salary, you should contribute at least 6% of your salary to receive the maximum match. 

  1. 2. Health Savings Account (HSA): $3,850 Individual, $7,750 Family  

The HSA offers "triple tax savings" advantage to its users. This means that contributions to an HSA are made with pre-tax dollars, the money in the account grows tax-free, and qualified withdrawals are tax-free as well. This triple tax savings provides a significant benefit to those who use an HSA to pay for medical expenses. In 2023, the contribution limit for an HSA is $3,850 for individuals and $7,750 for families. Additionally, individuals who are 55 years or older are eligible to make catch-up contributions of $1,000 per year, which is in addition to the regular contribution limit. 

  1. 3. Roth IRA: $6,500, $1,000 catch-up  

A Roth IRA is an individual retirement account that offers tax-free withdrawals in retirement. Contributions to a Roth IRA are made with after-tax dollars, so you won't receive a tax deduction for your contributions. However, your investments grow tax-free and qualified withdrawals in retirement are tax-free, which can provide significant tax savings in the long run. 

  1. 4. Traditional & Roth 401(k)/403(b): $22,500, $7,500 catch-up  

A 401(k)/403(b) is a retirement savings plan sponsored by an employer or tax exempt organization. Contributions to these accounts are either made with pre-tax or after-tax dollars.  These accounts offer you an unique ability to save and invest more money than your Traditional or Roth IRA.  Contribution limits for 2023 are $22,500 with a $7,500 catch-up for employees over 50.   

  1. 5. Taxable Brokerage Account: Unlimited 

A taxable brokerage account is a regular investment account that is held outside of a retirement account. Investments in a taxable brokerage account are subject to capital gains tax on investment gains and dividends. However, a taxable brokerage account offers greater flexibility and control over your investments, as well as the ability to invest in a wider variety of assets. 

In conclusion, the most tax efficient ways to invest your money are taking advantage of your employer's 401k match, using a Health Savings Account, contributing to your Roth IRA, participating in your employer's 401(k) & 403(b) plan, and finally, investing in a taxable brokerage account. Being that not everyone may be able to invest in each of these accounts, by using a combination of these investment options, you can build a diversified portfolio that meets your individual financial goals in a tax efficient manner. 

At Oakwell Private Wealth Management, our team of financial advisors are here to help you navigate the investment landscape and find the right investment options for your unique situation. Contact us today to learn more about how we can help you reach your financial goals. 

Oakwell Private Wealth Management is a Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities product, service or investment strategy. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional or attorney before implementing any strategy or recommendation discussed herein.