5 Questions: Timing the Market, College Savings, Betterment Woes

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We love getting questions from our listeners. Today we take five questions about HSAs, timing the market, college savings accounts, compounding, and Betterment woes.

We get a lot of questions at LMM, and if you’re asking, someone else is probably wondering too, so we like to answer questions for everyone.

1.  Is an HSA a good idea for a family that’s pregnant or has young children? 

An HSA is a good idea for anyone with a high deductible plan, it reduces your taxable income, and you don’t necessarily have to use it for medical expenses.  Check out Episode 171 for a deep dive into HSA’s.  The Mad Fientist also talked about HSA’s in Episode 120.

2.  What is your advice for someone looking to start investing this year?  I don’t want to attempt to time the market but want to be aware of the market climate before making my decision.  

The best time to invest is always now.  Even if interest rates go up soon, it’s still always better to be in the market than to not be invested.  Remember, buy and hold; you’re in it for the long haul.

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3.  What is the best college savings account?  

529 Plan is the one you’ll hear most about, but they come with a lot of stipulations, like having to attend in the state. If you do want to open an account but don’t want to do it yourself, have CollegeBacker do it for you. Or, the alternative would be to put the money into an IRA. It’s a tax-advantaged account and you can take out the principal without penalty.

529 College Savings Plans: What You Need to Know

529 College Savings Plans: What You Need to Know

4.  If I invest in a Roth IRA or index funds, how does it get compounded?  What rate do they use?  Why not invest annually?

 Investments don’t have set rates or terms because no one can predict how they will do.  It’s better to have your money invested now rather than once a year; you could miss a huge upswing.  You would also miss out on dividend payments.  As far as compounding, you can describe investing like that.  That’s for things like loans.

5.  Is your Betterment tanking?  What are some strategies to ride this out?  

Lots of investors are losing money, Ebola, ISIS, Ukraine, Hong Kong.  Big, traumatic world events cause downturns in the market.  This is a natural ebb and flow of the stock market.  If you’re in it for the long haul, as you must be, it doesn’t matter.

Thanks, everyone, keep the questions coming in.

Show Notes

Betterment:  Get your money in today. Want to learn more about Betterment? We put our money where our mouth is with our Betterment Review.

LMM Tool Box:  Everything you need to manage your money.

Candice Elliott - Senior Editor
Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.

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