The Simple Path to Wealth

Your roadmap to a rich, free life — in just five minutes per week.

March 3, 2026

It's last call for the live webinar featuring Morgan Housel and JL Collins!

On Thursday, March 5, two titans of personal finance will link up to break down the two sides of money management: Building your wealth and spending it wisely.

You can sign up for this first-of-its-kind event here.

THE SIMPLE NUMBERS

High-deductible insurance plans protect you from catastrophic healthcare bills, but they leave you on your own to deal with the first $5,000 or $10,000 in medical expenses that might pop up in a given year. You'll also have cheaper monthly premiums, which is nice, but the powers that be in the United States government saw fit to sweeten the deal just a bit.

Enter the Health Savings Account (HSA), which is like a specialized IRA for your medical bills. You can contribute pre-tax money, invest it, and withdraw the proceeds tax-free to pay for medical expenses.

For 2026, you can contribute $4,400 for yourself and $8,750 for a family. After you turn 55, you can contribute more each year. After 65, you can withdraw from your HSA for any purpose without penalties—though if you use the money for non-medical expenses, you'll owe taxes on the withdrawal.

But while HSAs have grown in popularity, most studies indicate that Americans aren't taking full advantage. A 2024 report from EBRI found the average American does not max out their contributions, and few actually invest the dollars they put in. Regular withdrawals are commonplace: "Over one-half of accountholders withdrew funds" in 2022, the study found, and "the average distribution rose to $1,868."

As we'll see, this is not the ideal strategy to make the most out of an HSA.

Ophthalmologist examines patient's eye with instrument. — Your HSA money doesn't *have* to go towards medical bills.

SIMPLE PATH OF THE DAY

A slice of timeless wisdom from The Simple Path to Wealth:

"Suppose we fully funded our HSA and invested the money in low-cost index funds. Then we’d pay our actual medical expenses out of pocket, carefully saving our receipts, while letting the HSA grow and compound tax-free over the decades. In effect, we’d have a Roth IRA in the sense that withdrawals are tax- free [for medical expenses] and a regular IRA in the sense that we get to deduct our contributions to it. The best of both worlds.

If we ever needed the money for medical expenses, it would still be there. But if not, it would grow tax-free to a potentially much larger amount. When we were ready, we would pull out our receipts and reimburse ourselves tax-free from our HSA, leaving any balance for future use. Should we be fortunate enough to remain healthy, after age 65, we would be able to take it out to spend as we please, just as with our IRA and 401(k) accounts, paying only the taxes then due."

ASK JL

Q: In your order of investing buckets, how do HSAs factor in? If you are eligible for an HSA account, at which step would you prioritize HSAs when figuring out your order of investing? —Troy R.

Hi Troy,

For the reasons I share in Chapter 21 of The Simple Path to Wealth, HSAs are one of the most beneficial and flexible buckets we have available. I’d fund it first.

—JL

Got a money question keeping you up at night? Reply to this email and we'll get it over to JL.

WHAT WE'RE READING

📚 Last month on his blog, JL had "Some Thoughts on Spending."

📚 This weekend, Ben Carlson rattled off "The 10 Rules for Dealing With Uncertainty" over at A Wealth of Common Sense.

📚 Today in nobody knows nothin': Despite tariffs and plenty of other uncertainty, the Wall Street Journal reports global trade surged in 2025.

THE BIG QUESTION

Do you have an HSA? Are your contributions invested in low-cost index funds? Or is it more of an afterthought in your financial life?

Reply to this email and we'll feature some of your responses in upcoming issues!

Last time, we asked whether you own international funds—and if so, when and why you decided to expand your focus beyond U.S. markets. Here are a few of your answers...

We retired early in September 2024 and moved to Ecuador this year. With the new political climate, I wanted to further diversify away from the U.S. in early 2025, so we added 15% international. I'm debating adding another 5% because the political climate has gotten worse and international focuses on sectors other than technology and the Magnificent 7. —Brandon G.

I have had part of my portfolio invested in international stocks using VTIAX since December 2014, at times representing between 15% and 25% of my stock portfolio (average 20%). VTIAX is currently 25% of my stock portfolio. That international investment has almost always underperformed VTSAX during that period up until last year, but I always believed that it was important to have more diversification than just the U.S. market. Maybe that belief will finally pay off over the next several years. —David G.

I was at 10% in VTIAX as of January 2025. Bumped it up to 15% in May and then 20% in September. Went to 25% in Jan 2026 and plan to stay there. Given what’s happening with stock values in U.S., this seems prudent. My remaining holdings are 5% in both VTG and VTV, with 65% in VTSAX. I'm retired and I like the low cost diversification. —Richard K.

I added VXUS to my portfolio in January of this year for some of the same reasons JL did, but also for others. While crashes don't scare me, extended periods (10-plus years) of flat or negative returns do. I've become increasingly worried about this lately, given that the U.S. market has been on a tear for roughly 15 years while international had been a dud prior to 2025.

During the Lost Decade, international did better than U.S. stocks, and with the huge gap in performance over those 15 years, surely there's going to be some reversion to the mean between the two asset classes. I came to view international as insurance, and any potential underperformance of international was the premium I was willing to pay.

I went with the VTI/VXUS combo instead of VT. I like being able to control the weights (currently at 70/30), and having VXUS instead of VT in a taxable account is more efficient because you receive the foreign tax credit. —Bryant Q.