HSA: Which funds to invest ?

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HSA: Which funds to invest ?

Post by davidsorensen32 » Wed Aug 30, 2017 8:38 pm

* CA resident (ouch !)
* $10K in HSA - all cash due to really bad funds available until now. Didn't want to bother with tax issues.
* New funds just became available - including several vanguard funds: https://image.yourhealth-wellnessteam.c ... 012017.pdf

How are people investing in their HSA ? Any recommendations ?

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Taylor Larimore
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Re: HSA: Which funds to invest ?

Post by Taylor Larimore » Wed Aug 30, 2017 8:54 pm


It is impossible to answer your question without knowing your goals, time-frame, risk tolerance, personal financial situation and your other investments.

If you will use the link below we can give you informed replies:


Best wishes.
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: HSA: Which funds to invest ?

Post by aristotelian » Wed Aug 30, 2017 9:05 pm

Consider keeping at least a portion in Total Bond Market and/or Short Term Investment Grade so you have a fairly stable threshold in case you ever want to use the funds for a major health issue.

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Re: HSA: Which funds to invest ?

Post by aj76er » Wed Aug 30, 2017 10:28 pm

I keep the required minimum in cash ($2k) to cover deductible, and the rest goes into Vanguard Institutional class S&P500, which I consider part of my long-term AA.

Currently, it is a small amount, but if I'm lucky enough to have it become a large sum, then I might get more conservative with it (e.g. adding some bonds or using a TIPS fund)
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Re: HSA: Which funds to invest ?

Post by dcabler » Thu Aug 31, 2017 6:06 am

There have been several threads on this subject, you might want to do a search.

Some things to consider
- do you plan on using your HSA to only pay for out-of-pocket healthcare costs?
- do you have a lot of healthcare costs such that you're likely use up your entire withholdings every year?
- are your healthcare costs fairly low such that you can consider your HSA for either future healthcare costs or as a supplement to your 401K/IRA?
- somewhere in between?

For somewhere in between, many people keep an amount equal to their annual deductible in cash and invest the remainder. Even then, one might just make sure they have, in cash, the amount of the deductible starting in January and let it drop over the year as they use it up. But it also depends on if you still want to use the HSA to pay any out-of-pocket costs once your deductible is met. Some choose to just pay for those costs themselves and use the HSA only for the deductible.

Anyway, once you figure all of that out, then you can decide how to invest the remainder. It could still be fairly conservative (cash/bonds) all the way up to something that matches the asset allocation of your investments outside of your HSA, depending on what you want to use it for and your time horizon.

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