Fidelity HSA Investment

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Sunflower88
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Fidelity HSA Investment

Post by Sunflower88 » Thu Jan 23, 2020 11:25 pm

Hello,

I am looking into rolling over my HSA (through my employer) to Fidelity. I am currently 31 years old and have 15k (cash) saved in my HSA account currently. My plan is to leave the money there for 25 plus years. I was wondering if it best to invest in the Fidelity Freedom Fund Index 2055 (FFLDX) or if I should pick my own investments from their personal lists to consider. I keep reading about the negative comments about Target Date Funds. Any advice/suggestions would be greatly appreciated, especially in regards to specific asset allocation. You can find the fund list here:

https://www.fidelity.com/bin-public/060 ... nsider.pdf

Thanks!

ryman554
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Re: Fidelity HSA Investment

Post by ryman554 » Fri Jan 24, 2020 9:28 am

Sunflower88 wrote:
Thu Jan 23, 2020 11:25 pm
Hello,

I am looking into rolling over my HSA (through my employer) to Fidelity. I am currently 31 years old and have 15k (cash) saved in my HSA account currently. My plan is to leave the money there for 25 plus years. I was wondering if it best to invest in the Fidelity Freedom Fund Index 2055 (FFLDX) or if I should pick my own investments from their personal lists to consider. I keep reading about the negative comments about Target Date Funds. Any advice/suggestions would be greatly appreciated, especially in regards to specific asset allocation. You can find the fund list here:

https://www.fidelity.com/bin-public/060 ... nsider.pdf

Thanks!
It sounds like you are new to investing in general.

There are two schools of thought:
1. Mainly use the HSA (as was nominally intended) for medical issues as they arise. Those should be invested in cash/short term bonds so you can pay as you go, at least up to the yearly out-of-pocket maximum. Above this can be invested like the next item.
2. Pay medical bills using available cash and use the HSA as a retirement vehicle. These should be invested as part of your overall portfolio. Some choose to place the higher growth elements of the portfolio here as it is the most tax-advantaged of all, but that is a second-order effect.

For Fido HSA, you have access to virtually any investment. Don't be limited to the funds in that pdf.

Now your question is "how do I invest, period?", and for that, well, it's a much larger discussion. I suggest perusing the wiki and reading the forum for that. There is nothing wrong with target date funds, especially if you lack the knowledge to know what you are doing. that's what they are for, make sure to choose a low cost one!

DucsRMe
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Re: Fidelity HSA Investment

Post by DucsRMe » Fri Jan 24, 2020 11:24 am

ryman554 wrote:
Fri Jan 24, 2020 9:28 am

It sounds like you are new to investing in general.

There are two schools of thought:
1. Mainly use the HSA (as was nominally intended) for medical issues as they arise. Those should be invested in cash/short term bonds so you can pay as you go, at least up to the yearly out-of-pocket maximum. Above this can be invested like the next item.
2. Pay medical bills using available cash and use the HSA as a retirement vehicle. These should be invested as part of your overall portfolio. Some choose to place the higher growth elements of the portfolio here as it is the most tax-advantaged of all, but that is a second-order effect.

For Fido HSA, you have access to virtually any investment. Don't be limited to the funds in that pdf.

Now your question is "how do I invest, period?", and for that, well, it's a much larger discussion. I suggest perusing the wiki and reading the forum for that. There is nothing wrong with target date funds, especially if you lack the knowledge to know what you are doing. that's what they are for, make sure to choose a low cost one!
Definitely agree with and follow #2, and I do invest aggressively in our HSA, for the reasons pointed out above. I work for a financial institution and they require the HSA payroll deductions be deposited to one of their HSA accounts. However, what I do is transfer 25% of my annual contribution each quarter ($2,000 x 4) to a Fido HSA account, which I have invested mainly in QQQ and a few small-cap growth stocks. I leave $8k in the bank HSA account, which pays Money Market rates, as something of a "medical emergency fund", although at this point I really don't need to do it. Might be something to consider, though.

carmonkie
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Re: Fidelity HSA Investment

Post by carmonkie » Fri Jan 24, 2020 11:59 am

I used the Fidelity 0 cost funds. Those are not listed in that pdf, but available to trade. You can trade anything you want.

The Fidelity HSA IMHO is the top HSA. You can build a 3-fund portfolio for almost nothing.

0 cost HSA (custodial/admin fees)
0 cost Total International and Total US Fund
0.025 FXNA. This is the bond fund I use from the list. It is the Vanguart Total Bond equivalent.

I keep the same asset allocation as my other investments.

xerxes101
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Re: Fidelity HSA Investment

Post by xerxes101 » Sat Jan 25, 2020 8:57 am

carmonkie wrote:
Fri Jan 24, 2020 11:59 am
I used the Fidelity 0 cost funds. Those are not listed in that pdf, but available to trade. You can trade anything you want.

The Fidelity HSA IMHO is the top HSA. You can build a 3-fund portfolio for almost nothing.

0 cost HSA (custodial/admin fees)
0 cost Total International and Total US Fund
0.025 FXNA. This is the bond fund I use from the list. It is the Vanguart Total Bond equivalent.

I keep the same asset allocation as my other investments.
^+1...this is what I am doing also. OP, imagine your money growing for 25 years with literally 0 expenses ...well OK may be when the bond portion of your portfolio gets to be $10,000 you'd have to pay $2.50... :D

torino06
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Re: Fidelity HSA Investment

Post by torino06 » Mon May 04, 2020 9:12 pm

I too am in the same boat as Sunflower and trying to determine what the heck to invest in... I think I will keep some in cash or bonds and aggressively invest the rest. But in what??? There are so many options I am becoming lost. Does anyone invest in individual stocks inside their HSA out of curiosity?

findx
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Re: Fidelity HSA Investment

Post by findx » Mon May 04, 2020 9:38 pm

This is what I did to my HSA investments that I moved to Fidelity recently.

54% Fidelity ZERO Total Market Index Fund (FZROX)
36% Fidelity ZERO International Index Fund (FZILX)
10% Fidelity U. S. Bond Index Fund (FXNAX)

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1789
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Re: Fidelity HSA Investment

Post by 1789 » Mon May 04, 2020 9:55 pm

I would keep 1 year out of pocket expenses in cash every year and put all rest 100% in FXAIX. This is best fund there imo.
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Re: Fidelity HSA Investment

Post by Vanguard Fan 1367 » Mon May 04, 2020 11:02 pm

1789 wrote:
Mon May 04, 2020 9:55 pm
I would keep 1 year out of pocket expenses in cash every year and put all rest 100% in FXAIX. This is best fund there imo.
When my rollover arrives at Fidelity and I have my very own HSA with Fidelity I plan to also go with FXAIX, Fidelity's S&P 500 fund. The fees are pretty low for this fund.

I don't have much in Roth IRA type accounts (if the HSA grows no taxes are due upon withdrawal on the increase or on the contribution) so I plan to leave the 10K in there and hopefully watch it grow for the next 10 plus years.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."

livesoft
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Re: Fidelity HSA Investment

Post by livesoft » Mon May 04, 2020 11:04 pm

torino06 wrote:
Mon May 04, 2020 9:12 pm
I too am in the same boat as Sunflower and trying to determine what the heck to invest in... I think I will keep some in cash or bonds and aggressively invest the rest. But in what??? There are so many options I am becoming lost. Does anyone invest in individual stocks inside their HSA out of curiosity?
I use a Freedom Index fund that has a stock:bond asset allocation of about 60:40. The ticker symbol is FQIFX.
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1789
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Re: Fidelity HSA Investment

Post by 1789 » Mon May 04, 2020 11:05 pm

Vanguard Fan 1367 wrote:
Mon May 04, 2020 11:02 pm
1789 wrote:
Mon May 04, 2020 9:55 pm
I would keep 1 year out of pocket expenses in cash every year and put all rest 100% in FXAIX. This is best fund there imo.
When my rollover arrives at Fidelity and I have my very own HSA with Fidelity I plan to also go with FXAIX, Fidelity's S&P 500 fund. The fees are pretty low for this fund.

I don't have much in Roth IRA type accounts (if the HSA grows no taxes are due upon withdrawal on the increase or on the contribution) so I plan to leave the 10K in there and hopefully watch it grow for the next 10 plus years.
I think you have a very good plan. As long as we live in USA, i imagine HSA accounts will be depleted faster than we think for health care expenses.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

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grabiner
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Re: Fidelity HSA Investment

Post by grabiner » Tue May 05, 2020 9:08 am

Welcome to the forum!

If you are using part of the HSA for current expenses, that should be kept in cash. One year's out-of-pocket max is a good idea.

But the rest of it is part of your retirement savings, so it should be invested as if it were part of your IRA. If your IRA and 401(k) are in target-date funds, your HSA can be in a target-date fund with the same date. If you use individual stock and bond funds, then you can hold just one fund in the HSA for simplicity; Fidelity has good options for all asset classes. (My own HSA is all in one fund, because the HSA is just 4% of my portfolio, and I hold the same fund in my Roth IRA as well to get up to my target allocation to that fund.)
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torino06
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Re: Fidelity HSA Investment

Post by torino06 » Fri May 15, 2020 12:05 am

well after a long wait and having the request from fidelity to my bank lost, the funds were finally transferred. Now what to invest in!?!?!? My idea is to keep 1000-1500 in cash as just in case money. Again, I would like to leave this untouched until retirement and try to have it grow as much as possible. I have read many positive posts about FXAIX. I was also looking at FZROX The (FZROX) (FZILX) (FXNAX) option has came up a few times. Any guidance would be appreciated!

TropikThunder
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Re: Fidelity HSA Investment

Post by TropikThunder » Fri May 15, 2020 12:27 am

torino06 wrote:
Fri May 15, 2020 12:05 am
well after a long wait and having the request from fidelity to my bank lost, the funds were finally transferred. Now what to invest in!?!?!? My idea is to keep 1000-1500 in cash as just in case money. Again, I would like to leave this untouched until retirement and try to have it grow as much as possible. I have read many positive posts about FXAIX. I was also looking at FZROX The (FZROX) (FZILX) (FXNAX) option has came up a few times. Any guidance would be appreciated!
Would have thought you had time to figure this out before the money arrived. :|

passive101
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Re: Fidelity HSA Investment

Post by passive101 » Fri May 15, 2020 2:13 am

I have a fidelity HSA. I was in the target date fund that came up when I did a search and someone recommended one that has a cheaper ER.
FIDELITY FREEDOM INDEX 2060 FUND - INSTITUTIONAL PREMIUM CLASS (FFLEX)

Expense Ratio of .08%

Northern Flicker
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Re: Fidelity HSA Investment

Post by Northern Flicker » Fri May 15, 2020 2:27 am

ryman554 wrote: Some choose to place the higher growth elements of the portfolio here as it is the most tax-advantaged of all...
That is not a correct argument. Once you make the contribution and get the deduction, that tax benefit is already received and what remains is the behavior of the investment and future withdrawals. A Roth IRA holding is more tax-advantaged than an HSA holding because you don’t need to spend the withdrawals on health care to be tax free.
Last edited by Northern Flicker on Fri May 15, 2020 2:43 pm, edited 1 time in total.
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Re: Fidelity HSA Investment

Post by Vanguard Fan 1367 » Fri May 15, 2020 12:24 pm

Northern Flicker wrote:
Fri May 15, 2020 2:27 am
ruman554 wrote: Some choose to place the higher growth elements of the portfolio here as it is the most tax-advantaged of all...
That is not a correct argument. Once you make the contribution and get the deduction, that tax benefit is already received and what remains is the behavior of the investment and future withdrawals. A Roth IRA holding is more tax-advantaged than an HSA holding because you don’t need to spend the withdrawals on health care to be tax free.
All of us probably will spend much more on HSA ok healthcare than we will have an amount in the HSA to cover those expenses.
So I consider the HSA to be equal to the Roth as the best place to put money for pain free withdrawal.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."

jaxxmjd
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Re: Fidelity HSA Investment

Post by jaxxmjd » Fri May 15, 2020 1:56 pm

I'm 37 and rolled over my HSA to Fidelity at the beginning of the year when we switched health plans. I'm currently 100% FXAIX, but will adjust over time to diversify more once the market stabilizes a bit.

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Re: Fidelity HSA Investment

Post by TropikThunder » Fri May 15, 2020 2:37 pm

Vanguard Fan 1367 wrote:
Fri May 15, 2020 12:24 pm
Northern Flicker wrote:
Fri May 15, 2020 2:27 am
ruman554 wrote: Some choose to place the higher growth elements of the portfolio here as it is the most tax-advantaged of all...
That is not a correct argument. Once you make the contribution and get the deduction, that tax benefit is already received and what remains is the behavior of the investment and future withdrawals. A Roth IRA holding is more tax-advantaged than an HSA holding because you don’t need to spend the withdrawals on health care to be tax free.
All of us probably will spend much more on HSA ok healthcare than we will have an amount in the HSA to cover those expenses.
So I consider the HSA to be equal to the Roth as the best place to put money for pain free withdrawal.
+1. Yes, HSA withdrawals are taxed if not qualifying, but given the lower contribution limits I have trouble imagining a scenario where someone doesn’t end up with enough qualifying expenses to cover their HSA balance.

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FIREchief
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Re: Fidelity HSA Investment

Post by FIREchief » Fri May 15, 2020 3:09 pm

carmonkie wrote:
Fri Jan 24, 2020 11:59 am
I used the Fidelity 0 cost funds. Those are not listed in that pdf, but available to trade. You can trade anything you want.

The Fidelity HSA IMHO is the top HSA. You can build a 3-fund portfolio for almost nothing.

0 cost HSA (custodial/admin fees)
0 cost Total International and Total US Fund
0.025 FXNA. This is the bond fund I use from the list. It is the Vanguart Total Bond equivalent.

I keep the same asset allocation as my other investments.
Yep, can't beat Fido for an HSA. 8-) Also, if you wanted to squeeze out that last bit of expenses, you could buy US treasuries instead of using a bond fund. I have part of my HSA invested in TIPS aligning with expected annual Medicare Part B premiums.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Fidelity HSA Investment

Post by Northern Flicker » Fri May 15, 2020 5:27 pm

Vanguard Fan 1367 wrote:
Fri May 15, 2020 12:24 pm
Northern Flicker wrote:
Fri May 15, 2020 2:27 am
ryman554 wrote: Some choose to place the higher growth elements of the portfolio here as it is the most tax-advantaged of all...
That is not a correct argument. Once you make the contribution and get the deduction, that tax benefit is already received and what remains is the behavior of the investment and future withdrawals. A Roth IRA holding is more tax-advantaged than an HSA holding because you don’t need to spend the withdrawals on health care to be tax free.
All of us probably will spend much more on HSA ok healthcare than we will have an amount in the HSA to cover those expenses.
So I consider the HSA to be equal to the Roth as the best place to put money for pain free withdrawal.
With an HSA you cannot control the timing of withdrawals or withdrawal rate tax-free. You can only reimburse health care expenses incurred with tax-free withdrawals. Suppose you are retired and wish to cover $5K in out-of-pocket health care expenses you have incurred and you wish to withdraw $25K tax-free to buy a car. The HSA will not support that but the Roth account will. Roth assets are more valuable than HSA assets.
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Re: Fidelity HSA Investment

Post by anon_investor » Fri May 15, 2020 5:45 pm

FIREchief wrote:
Fri May 15, 2020 3:09 pm
carmonkie wrote:
Fri Jan 24, 2020 11:59 am
I used the Fidelity 0 cost funds. Those are not listed in that pdf, but available to trade. You can trade anything you want.

The Fidelity HSA IMHO is the top HSA. You can build a 3-fund portfolio for almost nothing.

0 cost HSA (custodial/admin fees)
0 cost Total International and Total US Fund
0.025 FXNA. This is the bond fund I use from the list. It is the Vanguart Total Bond equivalent.

I keep the same asset allocation as my other investments.
Yep, can't beat Fido for an HSA. 8-) Also, if you wanted to squeeze out that last bit of expenses, you could buy US treasuries instead of using a bond fund. I have part of my HSA invested in TIPS aligning with expected annual Medicare Part B premiums.
TIPS! That is a really good idea for an HSA in draw down.

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Re: Fidelity HSA Investment

Post by FIREchief » Fri May 15, 2020 7:05 pm

Northern Flicker wrote:
Fri May 15, 2020 5:27 pm
Vanguard Fan 1367 wrote:
Fri May 15, 2020 12:24 pm
Northern Flicker wrote:
Fri May 15, 2020 2:27 am
ryman554 wrote: Some choose to place the higher growth elements of the portfolio here as it is the most tax-advantaged of all...
That is not a correct argument. Once you make the contribution and get the deduction, that tax benefit is already received and what remains is the behavior of the investment and future withdrawals. A Roth IRA holding is more tax-advantaged than an HSA holding because you don’t need to spend the withdrawals on health care to be tax free.
All of us probably will spend much more on HSA ok healthcare than we will have an amount in the HSA to cover those expenses.
So I consider the HSA to be equal to the Roth as the best place to put money for pain free withdrawal.
With an HSA you cannot control the timing of withdrawals or withdrawal rate tax-free. You can only reimburse health care expenses incurred with tax-free withdrawals. Suppose you are retired and wish to cover $5K in out-of-pocket health care expenses you have incurred and you wish to withdraw $25K tax-free to buy a car. The HSA will not support that but the Roth account will. Roth assets are more valuable than HSA assets.
I agree with you, but I think we need to consider each situation independently. I am no longer covered by an HDHP, so I'll likely not have any further contributions to my HSA. I do have annual health care expenses, but pay them out of pocket while robustly archiving the EOBs and payment receipts. It is likely that at some point in the next ten years, our documented unreimbursed qualified expenses will exceed the remaining HSA balances. That will make my HSA just like my Roth, because I can withdraw any amounts at any time without any taxes due (subject the IRS acceptance of my records and also assuming that both DW and I don't die first), while any remaining balance will continue to grow tax free.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Fidelity HSA Investment

Post by Northern Flicker » Sat May 16, 2020 2:50 pm

In that situation, if you are not yet 59.5, HSA space is more valuable, at least until you are 59.5 as it can be withdrawn before you are 59.5.
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FIREchief
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Re: Fidelity HSA Investment

Post by FIREchief » Sun May 17, 2020 12:57 am

Northern Flicker wrote:
Sat May 16, 2020 2:50 pm
In that situation, if you are not yet 59.5, HSA space is more valuable, at least until you are 59.5 as it can be withdrawn before you are 59.5.
Good point, but I've passed that milestone, so it doesn't matter. 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

illumination
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Re: Fidelity HSA Investment

Post by illumination » Sun May 17, 2020 11:22 am

I'm really aggressive in the way I invest in my HSA, 100% equities. My plan was to just use it to pay my MediCare premiums in retirement, at that point I'll have a glide path down the something less volatile. I assume that will draw most all of it down through retirement, I don't keep receipts now, but I probably should.

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Re: Fidelity HSA Investment

Post by carmonkie » Fri May 22, 2020 12:17 pm

illumination wrote:
Sun May 17, 2020 11:22 am
I'm really aggressive in the way I invest in my HSA, 100% equities. My plan was to just use it to pay my MediCare premiums in retirement, at that point I'll have a glide path down the something less volatile. I assume that will draw most all of it down through retirement, I don't keep receipts now, but I probably should.
I do not keep receipts either yet. I would if we were to have a major medical, but we would pay with our EM fund first before tapping the HSA. I'd rather tap the EM and replenish the EM Fund that tap in to the HSA. But as of right now we are not saving prescriptions or office visits receipts.

:sharebeer to staying healthy....

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Re: Fidelity HSA Investment

Post by Vanguard Fan 1367 » Fri May 22, 2020 1:24 pm

I appreciate Fidelity taking care of my HSA for the .015% expense ratio of their S&P 500 fund. When I started index investing I seem to recall a .07% er for their total stock market fund.

I would prefer that Fidelity go a little higher on their expense ratios than .015%. The free lunch can’t go on forever.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."

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