Because I have multiple rental units and a retirement petition, if I stay long enough in my current employer,  my "investing" is typically just maxing out my personal Roth IRA which is $6,000 a year.  But, because I was so optimistic on where the market was I choose to almost double that in 2020. 

Listed below are my actually purchases through 2020 into my Roth.

You may notice that I purchased only index funds and that came from my own trial and error which I talk about here. This strategy of buying mutual funds is often talked about in the Financial Independence community because of its passive management and low fees.

​Okay, let's take a deep dive into each of those purchases in my Roth IRA.

First, the Vanguard Total Stock Market Index Fund (VTSAX) purchases.

I bought the entire way down and actually lucked out by making my largest purchase at the very bottom which was 34.97% cheaper than the price 5 weeks earlier. My average purchase was 24.19% lower than what the peak was back in February and it still isn't back to that peak although it is getting close. 

Okay, now let's take a look at how I did with Vanguard S&P 500 Index (VOO) in my Roth.

I wasn't able to get this at quite the discount I was for VTSAX but I'll still take an average of 15.95% off.

These kinds of discounts made me want to buy more in my Robinhood account that I had stopped using. 

If you added all my purchases together here is how it looks!

Know your investment strategy! If you don't have one you need to think about it and create something that you want to stick with in the good times and bad. I know mine and that's helped me get almost 30% returns in 2019 and now over 20% through the Corona Virus. 

For me it is pretty simple, and is basically the Warren Buffet quote, "Be fearful when others are greedy, and greedy when others are fearful.” My investment strategy is buy and hold. So at any point there is a downturn in the market I want to dump as much cash in as I feel comfortable because my hope is that in 25 years America will still be going strong and those mutual funds will have increased in value.

It is THAT simple.

I don't get super nervous when the market drops because I don't know how far it's going to drop and I can't time when it'll drop or bounce back. My only hope is to purchase them at a discount and watch them increase in value over the next 20-30 years.

If you are interested in books on investing here are some I recommended!

In my head retirement accounts are broken up into two main categories, pre-tax accounts and post tax accounts.

Pre-Tax Accounts 
The money is taken out of your check before you even know it's there. Pre-tax accounts allow you to pay less in income taxes now so the government can let you grow your nest egg and tax it later. 

1. 401 (k)
This is the retirement account you are probably most familiar with. This is typically offered through your employer- they might even offer a match on your contributions. If this is the case it would be great to get the full match as they are giving you free money. You can't take withdraws until you are 59.5 and if you try before that you'll probably have to pay a penalty. For 2019 the max you can contribute is $19,000 but if you are over 50 you can contribute an additional $6,000 to try and catch up. 

2. 403 (b) 
If you work in public services jobs like a church, school, non-profits, etc, this is the retirement account you probably have. For 2019 the max you can contribute is $19,000 and if you are over 50 you can contribute an additional $6,000 to try and catch up. Typically you can withdraw at 59.5 but if you retire at 55 you may be able to access it earlier.

3. 457 (b)  
For those state or local government employees this is an additional option. You are able to invest and grow your money pre-tax but also withdraw money whenever you would need without a penalty. Obviously, you'd be taxed when you withdrew but it can be treated like an extra savings account if you wanted. If I remain in the schools and continue to grow my real estate portfolio at some point I'll try and take a couple hundred dollars to live off from there and starting putting money into a 457 to reduce my overall income but still have access to it if I needed. 

4. Solo 401(k) 
A sole proprietor can set up an individual 401(k) for him/her self or a spouse who they work with. This account is similar to the 401(k) listed above. You will be allowed to make contributions as both the employee and employer. You can potentially contribute up to $55,000 in 2018 (or $61,000 for someone 50 years of age or older).  Total contributions will depend on your net business income.

5. SEP IRA
The full name is Simplified Employee Pension and it is easier to set up than a Solo 401(k) but harder to max out pre-tax contributions. This account is typically used by people with self-employment income or small business owners. As the employer, you can contribute up to 25% of your income, or $55,000, whichever is less. There are no catch-up contributions on SEP IRAs.

6. Traditional IRA​
If you have a job you can contribute up to $6,000 ($7,000 if you are over 50) of pre-tax dollars to your account. You'll need to invest the money yourself, whether that’s in a bank, stocks or bonds, or something else entirely. This part may get confusing so buckle in.  If you're covered by a retirement plan at work, you can contribute to both an IRA and a 401(k) but you can't deduct your IRA contributions from your taxable income if you earn more than $74,000 (for single filers) or $123,000 (married filing jointly) in 2019. You can only take a partial deduction once your earnings reach $64,000 and $103,000 respectively. If you're not covered by a retirement plan at work, you get the full deduction no matter your income, unless you file jointly with a spouse who has a retirement plan at work.  Like a lot of plans there is a penalty if you withdraw before 59.5. A traditional IRA is a good retirement plan but if you can get a 401(k) plan with a matching contribution that’s better. 
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7. Spousal IRA
Typically IRAs are for people with earned income but as you probably guessed this is for a non-working spouse. The working spouse's taxable income must be more than the contributions made to any IRA. This is great because it will allow a spouse who does not generate an income to still save for retirement. 

8. Health Savings Account 
This is one of the more tricky accounts to try and explain and I created a whole separate post about it here. If you have a high-deductible health insurance plan you can contribute $3,500 a year for an individual or $7,000 for a family. If you're 55 or older, you can contribute $1,000 more. If you don't need the money for medical expenses, you can invest it as you would other retirement savings. The way it works is you can withdraw money from your account to pay allowable medical expenses or if you don't spend the money, it rolls over indefinitely. Once you're 65, you can withdraw money for any reason without penalty, but you have to pay income taxes on the money you withdraw. Another option is to use it for retiree medical expenses tax-free. If you withdraw the money before you're 65 for any reason besides medical expenses, you have to pay taxes and a 20 percent penalty. A sneaky thing you can do is, if you save your receipts, you can withdraw money to reimburse yourself for expenses you paid years ago. Hopefully that made sense. Basically there are a lot of option and as I said there is a reason I did a whole post on it!

After-Tax Accounts 
You are going to be contributing after-tax dollars which means there are no tax deductions. Good news is since the government is like 'We got our money now, don't worry about paying us later'. This works best for those people who think they may be in a higher tax bracket later on.  

9. Roth IRA
If you make less than $137,000 (if you're single) or $203,000 (if you're married filing jointly) in 2019 you can contribute $6,000 (or $7000 if you are over 50) to your account. If your income is more than $122,000 (single) or $193,000 (married filing jointly), your allowed contribution is reduced. You can contribute to both a Roth IRA and a traditional IRA, but the contribution limits apply to your total deposits. Some people who make too much to contribute to a Roth IRA contribute to a conventional IRA and convert it into a Roth later. Just like the traditional IRA you will invest the money yourself, whether that’s in a bank, stocks, bonds or something else. 

10. Roth 401(k)
This is very similar to the Roth IRA but you can contribute up to $19,000 (or $24,500 if you are of 50). You are able to get a match if your company offers it. You are able to access the money at 59.5 but have to have held it for 5+ years. Realistically, its very similar to a 401(k) but your taxes are paid now and not in the future. I although I would like to reduce my income now I like to believe I will make more in the future and be in a higher tax bracket than I am currently in. 

What Accounts Do I Have?

​I have what I believe is classified as a 401(a). I am a state employee so if I want that pension later on they decide all the things and I really have no say in the matter. I still have a personal Roth IRA that has grown significantly recently and I just got a health savings account.  I have my three real estate properties ( 1, 2, 3) and at some point I will want to take like $500 a month out of that and open a 457(b). This will allow me to reduce my overall income and pay less in taxes now but still have access to that money if I ever got into a bind. 

Normal Retirement Accounts
Typically there are two types of retirement accounts, your tax-free contribution accounts or tax-free withdrawal accounts.

Tax-Free Contribution Accounts
These are things like your 401k, Traditional IRA, etc. Your contributions to these accounts are made pre-tax, meaning they don't count against your income now. Let's say you make $50,000 and contribute $10,000, you'll only pay income taxes on $40,000 for that year. 

The government is saying, we are okay with you not paying taxes on it now because we'll let you grow it tax-free and we'll collect taxes when you withdrawal later on. 

These accounts are great to reduce your overall income now.

After-Tax Accounts
These are things like your Roth 401k, Roth IRA. Your contributions to these accounts are made after tax, meaning they count against your income now. Using the example from before, if you made $50,000 and contribute $5,000 you'll pay income taxes on $50,000.

The government is thinking, okay we took our taxes now so you can grow your money tax-free and not pay anything when you withdraw.

These accounts are great because you'll hopefully allow them to grow significantly and not have to pay any taxes on them later.

Health Savings Account
The HSA is designed to be a savings account for medical expenses that can provide some tax benefits. 

But, if done right, it can provide the best parts of both accounts described above, tax-free contributions and tax-free withdrawals.  Or in other words, completely tax-free money!

The magic of it is that you can make those tax-free withdrawals on a qualifying medical expense at any time you want!

As of now there is no rule stating you must withdraw money to directly pay for medical expenses or that you must withdraw in a certain time frame after a medical expense. You just take out the money whenever you want after you've had a qualifying medical expense. Assuming it was after you've opened your HSA of course.

See It In Action
We have gone over all of this and now you want to see how it would actually work. Let's assume I spend $300 a year on medical services and figure I can get away with having a high-deductible health plan (HDHP).  

With my brand new HDHP I decide to open up an HSA and max it out, and in 2019 the max is $3,500. Because this contribution is put in pre-tax I am able to reduce my taxable income by $3,500, meaning less taxes for me! Always a crowd pleaser!

​So when the time comes to go to the doctor and spend my $300 I have two real options. I can choose to use my tax-free dollars to pay for it now, or I can pay for it in cash now and reimburse myself later. 

That whole choosing when I pay myself back part is what makes it so great. If I'm able to pay the out of pocket expenses now, and keep the receipts (keep the physical copies but also make a digital one incase it fades) I can let my tax-free dollars continue to grow tax-free to withdrawal whenever I need. 

The Health Savings Account allows you to save money by not paying taxes on my $3,500 contribution, I also have $3200 that is growing tax-free, and $300 that will continue to grow tax free and I can withdraw whenever I want! 

Where The Magic Really is!
You may be thinking what happens if I save all this money and don't have any expenses or enough to pull out all my money? Well, that'd be awesome but what is magical about the HSA is when you turn 65 you can treat it like a traditional IRA and withdraw whatever you want. This will be treated as taxable income though. 

Things To Keep In Mind

• Maxing out your contribution will lower your taxable income.
• If you contribute via automatic deduction you avoid FICA taxes.
• You can invest your HSA into low cost index funds (mine has a minimum of $2100 before I can start)
• If you pay medical costs out of pocket you can withdraw that money whenever you want tax free if you keep your receipt (keep a digital copy!)
• If you haven't had enough expenses it turns into a traditional IRA at 65.
• Check to see if your employer will make contributions (mine does $700 a year- more free money).
• If you wait to pull out the money later it will naturally be less because of inflation. $100 now will not be the same as $100 in 20 years. 

​After finding out all of this was true I switched at the first chance I could when my job had its open enrollment and will be using an HSA starting the fall of 2019!

I dog eared the page so I could come back to it when I had the money. It recommended doing a target date retirement fund. They are a cool fund option that adjusts the ratio of stocks to bonds based on your age and adjust accordingly (it is actively managed so be aware of the fees). I remember thinking, ‘Okay, when I get to the point I can invest I’m going to do this. It’s so simple!’.
​
4 months after getting my first big person job I finally had enough to open a Roth IRA and make the minimum payment to get started with the retirement fund. Millionaire status here I come!
 
Since I was already going to be rich off of this I was also interested in stocks. Plus, it’s the grown up thing to do! I read a couple basic books to get some understanding. Testing it out was important to me just incase I was sooo wealthy in the future I needed a financial advisor.  I wanted to be prepared for those future discussions on what to do with my millions. Plus, my older brother is big into stocks and always gave me the analogy that it is like fantasy football. Figured let’s give it a shot!
 
Every month I put $50 into a Robinhood stock trading account. Side note - if you are looking for a place to invest I recommend them, they don’t have trade fees.
 
The whole concept was going to be easy, buy low, sell high. I got that!
 
Spoiler alert, that’s not how it went. I lacked any real buying power so I was stuck trying to buy stocks in the $5-$15 range and hoping they would take off. I would check multiple times a day and eventually got out with a loss of around $25.
 
When I gave up on stocks I moved all that money into my Roth IRA and into that target date retirement fund.
 
Stock Market Attempt Two: Mo’ Money, Less Problems
Okay, the first attempt did not go as planned. I was also no closer to being a millionaire.  The problem was I did not have enough money to get the good stocks. If I had things like Facebook, Google, Amazon, etc. it would have gone better. Also, more diversification would have helped.
 
I asked around, read articles like ‘Best 5 Stocks to Buy in 2018”, and was going to use $1000. This time was going to work! I bought stock in Facebook, Pfizer, Verizon and more big brands like that.
 
This time I lasted about 2 months, took a $100 loss, and figured out picking stocks is just not for me.  I watched the market too much and became obsessed with how my money is doing. I also didn't research it enough to know when to buy or what the deals are.
 
Again, all that money went to my Roth IRA.
 
My Roth IRA was not getting me any real returns either so I started moving my money around to find something better. I sampled a high dividend yield account with half my money and put the other half in the S&P 500. Figured that would be the easiest way to get my 8%.
 
Stock Market Attempt Three:  Show Me The Money!
Picking stocks still isn’t my thing and I’ve maxed out my Roth IRA each of the past two years.
 
I recently passed the one year mark of when I gave up picking stops for good and was interested what would have happened had I held.
 
As I sat to pull up the stock charts I was surprised to find that if I held not only  would I have gotten all my money back, I actually would have made money! The return on my money would have been 3.22% (Not that 12% I needed) and was less that what the market was doing over that time. You can see for yourself!