Where to Invest HSA funds

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Where to Invest HSA funds

Postby inspector00 » Mon Jul 01, 2013 10:32 pm

my HSA allows you to invest funds with some limited options. I don't know that i've made an optimal decision with investing this money, I've been maxing out the account for a little while and having recently added a spouse to my account I will be putting twice as much in as I had before. Any advise would be appreciated.

Current Investment:
HABDX (HARBOR) 50%
HARBOR BOND INSTL
(12.1% growth)

NBGIX (NEUBERG...) 50%
NEUBERGER BERMAN Genesis Instl
(-3.2% growth)


Other Options
Category Symbol Fund Name 1 yr* 3 yr* 5 yr* Add
Unspecified
MGSSX
MassMutual Select BlackRock Global Allocation Fund Add
DIVERSIFIED EMERGING MKTS
LZEMX
LAZARD EMERGING MARKETS EQUITY INSTL 16.83% 7.40% 1.05% Add
FOREIGN LARGE BLEND
MRSIX
MFS RESEARCH INTERNATIONAL I 26.84% 11.49% -1.36% Add
LARGE BLEND
WFIOX
WELLS FARGO ADVANTAGE INDEX ADM 27.02% 16.63% 5.22% Add
LARGE GROWTH
CEYIX
CALVERT EQUITY I 21.74% 14.37% 5.53% Add
LARGE VALUE
SSHFX
SOUND SHORE 36.03% 16.25% 4.49% Add
MULTISECTOR BOND
OSIIX
OPPENHEIMER GLOBAL STRATEGIC INC I 10.40% Add
SMALL BLEND
NSIDX
NORTHERN SMALL CAP INDEX 30.95% 15.41% 6.91% Add
Last edited by inspector00 on Tue Jul 02, 2013 12:03 am, edited 1 time in total.
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Re: Where to Invest HSA funds

Postby grabiner » Mon Jul 01, 2013 11:14 pm

Welcome to the forum!

The first question to ask is what you are doing with the HSA. If you are planning to use it for medical expenses as needed (which is the best strategy if you can't max out your retirement plans), then it should be in low-risk investments so that you will have the money when you need it. If you are paying medical expenses out of pocket now and keeping the HSA with the intention of using it for medical expenses in retirement (which is the best strategy if you are maxing out your retirement plans, as it increases your tax-deferred savings), the HSA is part of your retirement portfolio, and should be invested as if it were an extension of your IRA; try to make the whole portfolio allocation meet your plan.

Whichever way you use the HSA, look at the expenses as charged by your HSA provider, as that is the most important factor in choosing investments in a particular class, and make sure the class fits with your other investments.

If your HSA is saved for current expenses, you want to use either Harbor Bond (the less risky bond fund) or just leave the whole thing in a bank account.

If you are investing your HSA for the long term, the Northern Small-Cap Index appears to be a Russell 2000 index fund with 0.15% expenses, which is an extremely low cost as long as your own provider doesn't add expenses on top of that. Thus, it is the best choice if you need to hold some small-cap stock. The next lowest cost is the Wells Fargo Index fund at 0.25%; while that isn't much worse, most 401(k) plans already have a low-cost S&P 500 index which serves the same function, so you are more likely to want a small-cap fund than a large-cap fund in your HSA.

If you would like help in fitting the HSA fund with the rest of your portfolio, post your portfolio in this form:
Asking Portfolio Questions
David Grabiner
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Re: Where to Invest HSA funds

Postby inspector00 » Mon Jul 01, 2013 11:26 pm

Thank you for the quick reply. I mostly think of the HSA as an investment account but I have pulled small amounts out of it for convenience. I'll go ahead and gather all the information in the format you posted as I know I have alot to learn.

Thanks
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