Poor HSA Investment Options

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mrrr0809
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Joined: Wed Jan 10, 2018 10:17 am

Poor HSA Investment Options

Post by mrrr0809 » Thu Aug 09, 2018 7:51 am

I have chosen to use an HSA as an investment vehicle. I plan to max out the annual allowance and let the funds go untouched and invested for many years. The downside is that the funds that are available for investment are actively managed funds that seem to yield poor returns.

There are about 15 places the money can be divided including small to mid cap, large growth, bonds, foreign, real estate, etc. Here are the available funds:

CAAPX Ariel Appreciation
CSMVX Congress Small Cap Growth Retail
RPFRX Davis Real Estate
GABEX Gabelli Equity Income AAA
JENSX Jensen (J shares)
JETAX Aberdeen Select International Eq II A
LSBRX Loomis Sayles Bond (Retail)
MHCAX Mainstay High Yield Corp A
MWLDX Metropolitan West Low Duration
ODMAX Oppenheimer Developing Markets (Class A Shares)
PCRAX PIMCO Commodity Real Return Strategy Fund Class A
OUSGX Oppenheimer US Govt Trust
PAXWX Pax World Balanced
HFLGX Hennessy Cornerstone Large Growth Fund
TPINX Templeton Global Bond A

Any suggestions?

BuckyBadger
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Re: Poor HSA Investment Options

Post by BuckyBadger » Thu Aug 09, 2018 8:27 am

Expense ratios?

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jhfenton
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Location: Ohio

Re: Poor HSA Investment Options

Post by jhfenton » Thu Aug 09, 2018 8:30 am

mrrr0809 wrote:
Thu Aug 09, 2018 7:51 am
Any suggestions?
Ugh.

I'd do what I do and periodically transfer or roll the money to an outside HSA provider. Unlike a 401(k), your money cannot be locked into an HSA account. Your employer can mandate where payroll contributions go, but they can't require you to keep it there.

If your employer-sponsored custodian (ESC) charges a transfer fee, you will probably be stuck doing a once-per-12-months rollover, where you take a distribution and deposit it into another HSA account within 60 days (usually immediately).

If your ESC does not charge a transfer fee, like mine, you can do more frequent trustee-to-trustee transfers. I request a transfer every quarter, and my ESC mails a check directly to my chosen custodian, Lively. There I invest it in a linked TD Ameritrade account.

My ESC offers a couple of decent Vanguard funds, but they also charge $2/month + 0.20% per year and require $2,000 in cash earning a paltry 0.25%. On a $50,000 account, I would be paying $124/year in fees plus incurring the cash drag. At Lively, I pay $2.50/month from a linked checking account. And with quarterly transfers I never have more than $1,500 sitting in cash earning 0.25%. So for me, going to the trouble of a separate HSA account is an easy decision.

aristotelian
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Re: Poor HSA Investment Options

Post by aristotelian » Thu Aug 09, 2018 8:31 am

Just transfer for investment account to Lively or another custodian of your choice.

Silk McCue
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Re: Poor HSA Investment Options

Post by Silk McCue » Thu Aug 09, 2018 8:40 am

BuckyBadger wrote:
Thu Aug 09, 2018 8:27 am
Expense ratios?
Expense ratios and Front Load for each would help if you don't take the advice to rollover as suggested (which is likely the best answer).

I've already pulled up each of these offerings and examined their ER and Front Loads and multiple time periods for returns. Eight have no front load. However, don't have time to put that back in a report in a post especially since your best option may be to rollover.

Cheers

tenkuky
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Re: Poor HSA Investment Options

Post by tenkuky » Thu Aug 09, 2018 9:20 am

aristotelian wrote:
Thu Aug 09, 2018 8:31 am
Just transfer for investment account to Lively or another custodian of your choice.
+ 1 for Lively.
Just make sure your vendor does not charge a "transfer" fee or something like that (I've been dealing with HealthEquity and it's ugly).
Also, if you are transferring out, do you plan to do it once a year or more frequently?
It will limit your method: indirect rollovers (you take distribution and you contribute to new HSA) is only allowed once a year, while trustee-to-trustee "transfers" are not limited. But there may be fees for the latter.

mrrr0809
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Re: Poor HSA Investment Options

Post by mrrr0809 » Sat Aug 11, 2018 11:49 am

After looking into the options mentioned, I’ve opted to go ahead and utilize Lively. There were too many uncertainties with the employer funded servicer. I was told there should not be any fees with Trustee to Trustee transfers, so I’ll transfer the money twice a year to be invested through Lively in TDAmeritrade accounts.

With that being said, what TDAmeritrade accounts are favored?

RIMDBogle
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Re: Poor HSA Investment Options

Post by RIMDBogle » Sat Aug 11, 2018 1:17 pm

Thanks for opening this thread,

I did see many folks use lively for HSA.

What are the funds/ETFs used in your HSA portfolio?

Is it single ETF/FUND or multiple with AA?

Thanks for sharing.

aristotelian
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Re: Poor HSA Investment Options

Post by aristotelian » Sat Aug 11, 2018 2:57 pm

RIMDBogle wrote:
Sat Aug 11, 2018 1:17 pm
Thanks for opening this thread,

I did see many folks use lively for HSA.

What are the funds/ETFs used in your HSA portfolio?

Is it single ETF/FUND or multiple with AA?

Thanks for sharing.
Lively lets you invest through TD Ameritrade's brokerage platform, including their whole list of commission free ETF's. I have my HSA in SLYV (Small Cap Value) and ITE (Intermediate Treasury). SPTM is their Total Stock Market fund. This will not be the solution for you if you strongly prefer mutual funds or you are a Vanguard loyalist.

RIMDBogle
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Re: Poor HSA Investment Options

Post by RIMDBogle » Sat Aug 11, 2018 3:53 pm

aristotelian wrote:
Sat Aug 11, 2018 2:57 pm
Lively lets you invest through TD Ameritrade's brokerage platform, including their whole list of commission free ETF's. I have my HSA in SLYV (Small Cap Value) and ITE (Intermediate Treasury). SPTM is their Total Stock Market fund. This will not be the solution for you if you strongly prefer mutual funds or you are a Vanguard loyalist.
Thanks for sharing. I am not attached to MF/Vanguard. Did you adopt Boglehead 3 Fund approach here? What is your portfolio with AA look like?

How did it perform so far?

How did you align your HSA portfolio assets with overall portfolio ( eg 401K, Roth IRA, IRA, Taxable account)?

Do you maintain all your account with TDA under one umbrella?

(I am struggling in this area to avoid re-balance nightmare).

Thanks for sharing.

aristotelian
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Joined: Wed Jan 11, 2017 8:05 pm

Re: Poor HSA Investment Options

Post by aristotelian » Sat Aug 11, 2018 4:18 pm

RIMDBogle wrote:
Sat Aug 11, 2018 3:53 pm
aristotelian wrote:
Sat Aug 11, 2018 2:57 pm
Lively lets you invest through TD Ameritrade's brokerage platform, including their whole list of commission free ETF's. I have my HSA in SLYV (Small Cap Value) and ITE (Intermediate Treasury). SPTM is their Total Stock Market fund. This will not be the solution for you if you strongly prefer mutual funds or you are a Vanguard loyalist.
Thanks for sharing. I am not attached to MF/Vanguard. Did you adopt Boglehead 3 Fund approach here? What is your portfolio with AA look like?

How did it perform so far?

How did you align your HSA portfolio assets with overall portfolio ( eg 401K, Roth IRA, IRA, Taxable account)?

Do you maintain all your account with TDA under one umbrella?

(I am struggling in this area to avoid re-balance nightmare).

Thanks for sharing.
I wanted a chunk of the HSA in bonds in case I want to make withdrawals. I chose SLYV as part of a slight overall tilt toward small value. I don't really track the performance. SPTM would be the better choice for a classic Boglehead portfolio.

TropikThunder
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Re: Poor HSA Investment Options

Post by TropikThunder » Sat Aug 11, 2018 4:45 pm

aristotelian wrote:
Sat Aug 11, 2018 4:18 pm
RIMDBogle wrote:
Sat Aug 11, 2018 3:53 pm
How did you align your HSA portfolio assets with overall portfolio ( eg 401K, Roth IRA, IRA, Taxable account)?
I wanted a chunk of the HSA in bonds in case I want to make withdrawals. I chose SLYV as part of a slight overall tilt toward small value. I don't really track the performance. SPTM would be the better choice for a classic Boglehead portfolio.
I do pretty much the same, except I am 100% stock in my HSA (SPTM) with the expectation that domestic equity should show the highest growth over time and I have no current plans to use any of it for medical payments now. Plus, an HSA has the best tax treatment if withdrawals are for qualified expenses, and I can't imagine someone not being able to use the majority of their HSA withdrawals on medical in retirement.

Additional rationale for being 100% US stock in a single ETF is that my HSA is only ~10% of my yearly retirement savings ($3,450 HSA + $24,500 403b + $6,500 IRA) so it's not worth splitting among multiple funds. Rebalancing will not be an issue. :beer

TropikThunder
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Re: Poor HSA Investment Options

Post by TropikThunder » Sat Aug 11, 2018 4:49 pm

tenkuky wrote:
Thu Aug 09, 2018 9:20 am
aristotelian wrote:
Thu Aug 09, 2018 8:31 am
Just transfer for investment account to Lively or another custodian of your choice.
+ 1 for Lively.
Just make sure your vendor does not charge a "transfer" fee or something like that (I've been dealing with HealthEquity and it's ugly).
Also, if you are transferring out, do you plan to do it once a year or more frequently?
It will limit your method: indirect rollovers (you take distribution and you contribute to new HSA) is only allowed once a year, while trustee-to-trustee "transfers" are not limited. But there may be fees for the latter.
Yeah strong thumbs down for Health Equity. My main gripe is that they freeze your account for 7 days before they'll process a transfer request, then it takes about another weak for the money to arrive at Lively and be available to transfer to TDA. They don't charge a transfer fee per se, but if you indicate on the transfer form that you are transferring the whole balance, they will close your account and charge a $25 closure fee (the account will re-open when the next employer contribution arrives but you don't get the $25 back without complaining). They even close your account if you mark "keep account open" on the form if you go below their $25 account minimum, so I have taken to leaving $25 there and transferring the rest.

FunnelCakeBob
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Re: Poor HSA Investment Options

Post by FunnelCakeBob » Sat Aug 11, 2018 8:41 pm

RIMDBogle wrote:
Sat Aug 11, 2018 1:17 pm
Thanks for opening this thread,

I did see many folks use lively for HSA.

What are the funds/ETFs used in your HSA portfolio?

Is it single ETF/FUND or multiple with AA?

Thanks for sharing.
+1 for Lively.

I use the HSA as part of my overall investment portfolio and won't pay qualified expenses from it yet. For simplicity, I invest it all in one ETF.

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jhfenton
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Location: Ohio

Re: Poor HSA Investment Options

Post by jhfenton » Sun Aug 12, 2018 8:40 am

I also invest my entire HSA in one asset class for simplicity, in my case emerging markets. SPEM, the SPDR Core Portfolio EM fund, is 11 bp.

informal guide
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Re: Poor HSA Investment Options

Post by informal guide » Sun Aug 12, 2018 9:30 am

I don't know if it is totally open to the public, but I was able to transfer my investment-oriented HSA to a Fidelity HSA two years ago, because decades ago, I worked for a firm where fidelity managed its 401k. I made maximum contributions for 10+ years and never did a withdrawal - -it is now worth 6 figures. Last year, Fidelity let my wife set up an HSA too - -she hadn't ever had a FIdelity 401k relationship.

This account runs just like any other Fidelity brokerage account - -no fee, etc. and availability of i-shares ETFs with no trading costs. I presume the zero fee funds would be available there too (I use the now 1.5 bp Fidelity total stock index - -FSTVX - - and am fine with it because capital gains don't matter in a tax-deferred account).

You may want to call and ask.

FunnelCakeBob
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Re: Poor HSA Investment Options

Post by FunnelCakeBob » Sun Aug 12, 2018 9:47 pm

jhfenton wrote:
Sun Aug 12, 2018 8:40 am
I also invest my entire HSA in one asset class for simplicity, in my case emerging markets. SPEM, the SPDR Core Portfolio EM fund, is 11 bp.
I also utilize one of the commision-free ETFs. I live in a state that does not recognize HSA as a tax advantaged investment vehicle so I minimize costs and trading.

By the way, jhfenton, your posts last year regarding your experience with Lively convinced me to switch earlier this year. Thanks!

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jhfenton
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Re: Poor HSA Investment Options

Post by jhfenton » Mon Aug 13, 2018 9:10 am

FunnelCakeBob wrote:
Sun Aug 12, 2018 9:47 pm
jhfenton wrote:
Sun Aug 12, 2018 8:40 am
I also invest my entire HSA in one asset class for simplicity, in my case emerging markets. SPEM, the SPDR Core Portfolio EM fund, is 11 bp.
I also utilize one of the commision-free ETFs. I live in a state that does not recognize HSA as a tax advantaged investment vehicle so I minimize costs and trading.

By the way, jhfenton, your posts last year regarding your experience with Lively convinced me to switch earlier this year. Thanks!
You're very welcome. :beer I hope Lively, or at least their business model, succeeds. I remember being disappointed when HSAs were first created at how hard it was to open an account anywhere that I wanted to invest.

I still wish something like the Fidelity deal were open to the public and not just through employers: just an simple investment account straight with a major brokerage firm. I'm still hoping I can get my mini-megacorp to move our HSA to Fidelity. We already have our company 401(k) through Fidelity.

In the meantime, Lively is more than reasonable. I just wish I didn't have to manually do a transfer every few months. :oops:

tenkuky
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Re: Poor HSA Investment Options

Post by tenkuky » Thu Aug 16, 2018 8:17 pm

I like Lively a lot, but a few things for nitpickers to be aware of with them...
1. The chat feature is excellent, but is only available outside of your secure login account environment. I talked to them about this and it's mainly for marketing right now. If you have account specific questions, they recommend call them. I am spoiled by having in-account secure chat with Schwab.
2. The dashboard is a little frustrating, you click and it basically goes nowhere unless they have activated. e.g. click on investments, just blank screen until there is actually funds in there to invest.
3. Timelines. An ACH transfer/rollover can take upto 3-5 days to be available. Then, to transfer to investment TD side can take another 1-2 days. Maybe it's good to avoid market timing, but if ACH can happen in 1 day, not sure why they take more time.

This is just for information. I still go with them for all the good points raised by jhfenton and others.

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jhfenton
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Re: Poor HSA Investment Options

Post by jhfenton » Thu Aug 16, 2018 8:38 pm

tenkuky wrote:
Thu Aug 16, 2018 8:17 pm
I like Lively a lot, but a few things for nitpickers to be aware of with them...
1. The chat feature is excellent, but is only available outside of your secure login account environment. I talked to them about this and it's mainly for marketing right now. If you have account specific questions, they recommend call them. I am spoiled by having in-account secure chat with Schwab.
+1 A few months ago, I suggested a secure message center inside the account to them, and they said that it is on their roadmap. Currently, they do more than they should by insecure email. They do check that you're emailing from the registered address, because they asked me to verify an information request from the registered account. But I'm not sure how thoroughly they verify. It is not hard to superficially spoof a "From:" address.

They also don't currently have a secure mechanism inside the account for changing the registered email address. They can change it for you, but taking that request by email is not particularly secure.

I view it as growing pains. They started out with a barebones customer service interface that they are slowly building out. If they survive five years, I expect it'll look pretty good. (Fingers crossed.)

Lively's ACH pulls are very slow. I've only done one for $50, but it took 3 days. But ACH pushes from my wife's employer to her account show up on payday evening. (And they credit my rollover checks quickly.) It's probably an issue with their banking partner. The bank which holds our mortgage is the same way with their linked checking account. ACHs initiated through them are slow, but they credit pushes quickly. I don't understand why.

I've never had the transfer to TD Ameritrade take more than one business day, but, with their systems linked, I don't see any reason it shouldn't be immediate. 8-)

Angst
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Re: Poor HSA Investment Options

Post by Angst » Thu Aug 16, 2018 9:53 pm

RIMDBogle wrote:
Sat Aug 11, 2018 3:53 pm
aristotelian wrote:
Sat Aug 11, 2018 2:57 pm
Lively lets you invest through TD Ameritrade's brokerage platform, including their whole list of commission free ETF's. I have my HSA in SLYV (Small Cap Value) and ITE (Intermediate Treasury). SPTM is their Total Stock Market fund. This will not be the solution for you if you strongly prefer mutual funds or you are a Vanguard loyalist.
Thanks for sharing. I am not attached to MF/Vanguard. Did you adopt Boglehead 3 Fund approach here? What is your portfolio with AA look like?

How did it perform so far?

How did you align your HSA portfolio assets with overall portfolio ( eg 401K, Roth IRA, IRA, Taxable account)?

Do you maintain all your account with TDA under one umbrella?

(I am struggling in this area to avoid re-balance nightmare).

Thanks for sharing.
I do NOT sweat the details of what I hold specifically in my HSA vs my 529, etc. I look at my portfolio in its entirety. I'm quite willing to hold just one fund (what's the total stock market fund now available at TDA? e.g.) and compensate elsewhere with my other holdings. It's really just the overall portfolio and its overall net allocations that ultimately matter to me. If I'm heavy on TSM US equity in my HSA (simply for example), I'll make it up with Int'l equity and bonds elsewhere.

tenkuky
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Re: Poor HSA Investment Options

Post by tenkuky » Fri Aug 17, 2018 12:13 pm

jhfenton wrote:
Thu Aug 16, 2018 8:38 pm
tenkuky wrote:
Thu Aug 16, 2018 8:17 pm
I like Lively a lot, but a few things for nitpickers to be aware of with them...
1. The chat feature is excellent, but is only available outside of your secure login account environment. I talked to them about this and it's mainly for marketing right now. If you have account specific questions, they recommend call them. I am spoiled by having in-account secure chat with Schwab.
+1 A few months ago, I suggested a secure message center inside the account to them, and they said that it is on their roadmap. Currently, they do more than they should by insecure email. They do check that you're emailing from the registered address, because they asked me to verify an information request from the registered account. But I'm not sure how thoroughly they verify. It is not hard to superficially spoof a "From:" address.

They also don't currently have a secure mechanism inside the account for changing the registered email address. They can change it for you, but taking that request by email is not particularly secure.

I view it as growing pains. They started out with a barebones customer service interface that they are slowly building out. If they survive five years, I expect it'll look pretty good. (Fingers crossed.)

Lively's ACH pulls are very slow. I've only done one for $50, but it took 3 days. But ACH pushes from my wife's employer to her account show up on payday evening. (And they credit my rollover checks quickly.) It's probably an issue with their banking partner. The bank which holds our mortgage is the same way with their linked checking account. ACHs initiated through them are slow, but they credit pushes quickly. I don't understand why.

I've never had the transfer to TD Ameritrade take more than one business day, but, with their systems linked, I don't see any reason it shouldn't be immediate. 8-)
Glad to know your thoughts on this are same as mine.
One more thing I learned today from them... Internet Explorer browser causes a mess in viewing/popping up the TD investment portion (that's why I was getting blank screens). They recommend Chrome or Firefox.
And it is taking more than a day to do the internal transfer.
I also am being prompted for a TD login, again should not be happening with SSO.

MichCPA
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Re: Poor HSA Investment Options

Post by MichCPA » Fri Aug 17, 2018 12:18 pm

aristotelian wrote:
Thu Aug 09, 2018 8:31 am
Just transfer for investment account to Lively or another custodian of your choice.
+1

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jhfenton
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Location: Ohio

Re: Poor HSA Investment Options

Post by jhfenton » Fri Aug 17, 2018 1:13 pm

tenkuky wrote:
Fri Aug 17, 2018 12:13 pm
I also am being prompted for a TD login, again should not be happening with SSO.
I just checked, and the SSO is still working for me. To be honest, though, I never use it. I just log directly into TD Ameritrade.

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