* 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 ?
HSA: Which funds to invest ?
- Taylor Larimore
- Posts: 32842
- Joined: Tue Feb 27, 2007 7:09 pm
- Location: Miami FL
Re: HSA: Which funds to invest ?
David:
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:
ASKING PORTFOLIO QUESTIONS
Best wishes.
Taylor
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:
ASKING PORTFOLIO QUESTIONS
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
-
- Posts: 12277
- Joined: Wed Jan 11, 2017 7:05 pm
Re: HSA: Which funds to invest ?
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.
Re: HSA: Which funds to invest ?
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)
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)
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle
Re: HSA: Which funds to invest ?
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.
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.