Fidelity HSA Investments

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lawilli5
Posts: 5
Joined: Mon Aug 24, 2020 9:11 am

Fidelity HSA Investments

Post by lawilli5 »

Hey everyone,

My wife and I currently each have our own Fidelity HSA accounts. We are both 28 years old and looking to start investing with these accounts. Would you suggest investing in the typical Bogleheads index funds such as Total Stock, Total International etc? Or I have heard of some people investing their HSAs in REITs since REITs are not the most tax efficient. A less tax efficient account would be great for an HSA and this could allow for further diversification (at least that is my understanding).

I appreciate the help!
aednichols
Posts: 93
Joined: Mon Nov 21, 2016 4:44 pm

Re: Fidelity HSA Investments

Post by aednichols »

Check out the Fidelity Four-in-One Index Fund, FFNOX.

It is an all-in-one three fund portfolio with 60% US equities, 25% international, and 15% bonds.
justsomeguy2018
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Joined: Wed Oct 03, 2018 8:11 pm

Re: Fidelity HSA Investments

Post by justsomeguy2018 »

lawilli5 wrote: Mon Aug 24, 2020 9:23 am Hey everyone,

My wife and I currently each have our own Fidelity HSA accounts. We are both 28 years old and looking to start investing with these accounts. Would you suggest investing in the typical Bogleheads index funds such as Total Stock, Total International etc? Or I have heard of some people investing their HSAs in REITs since REITs are not the most tax efficient. A less tax efficient account would be great for an HSA and this could allow for further diversification (at least that is my understanding).

I appreciate the help!
I wouldn't stray too far from your typical asset allocation.

I do the 3-fund portfolio but I keep it a little more conservative as it operates as a quasi-emergency fund (this only works if you have a backlog of medical bills that you paid out of pocket instead of with the HSA funds - you can pay yourself back later with the HSA)
Olemiss540
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Joined: Fri Aug 18, 2017 8:46 pm

Re: Fidelity HSA Investments

Post by Olemiss540 »

I am using fidelity's zero fee based US equity fund FZROX. I dont hold REITs and believe in holding my bond allocation inside my 401k so the HSA grows as much as possible due to its favorable tax treatment.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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FIREchief
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Joined: Fri Aug 19, 2016 6:40 pm

Re: Fidelity HSA Investments

Post by FIREchief »

Our HSAs are currently a combination of individually held TIPS and US TMI (total market index) funds. I'll likely migrate them to all US TMI as we liquidate some after-tax equity holdings. The HSA TIPS were originally an extension of my TIPS centric LMP.

It all depends upon how you envision using your HSA. If you'll treat it as a long term savings tool, than it is a great place for stock funds. If you expect to reimburse qualified medical expenses on an annual basis, than maybe more fixed income would be appropriate.

I don't really require an emergency fund at this point, but a ready source of tax free liquidity may be useful. A growing HSA balance with an accompanying growing stack of un-reimbursed medical expenses fits the bill for this quite nicely. 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.
terran
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Joined: Sat Jan 10, 2015 10:50 pm

Re: Fidelity HSA Investments

Post by terran »

I invest ours just like our retirement accounts, but I'm willing to spend out of pocket on medical expenses if I feel the need to let the HSA recover. As with a retirement account putting tax inefficient investments in the HSA makes sense, but I'd only go with REITs if they're part of your normal asset allocation.

Here's a list of good Boglehead approved investments at Fidelity: https://www.bogleheads.org/wiki/Fidelity. Fidelity also has good target date index funds, and for some reason they'll let you invest in the institutional class funds that are usually only available in certain employer plans that have lower expense ratios than the normal funds.
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dogagility
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Re: Fidelity HSA Investments

Post by dogagility »

Olemiss540 wrote: Mon Aug 24, 2020 10:25 am I am using fidelity's zero fee based US equity fund FZROX. I dont hold REITs and believe in holding my bond allocation inside my 401k so the HSA grows as much as possible due to its favorable tax treatment.
This^^^^
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bubbly
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Joined: Tue Jun 16, 2015 4:21 pm

Re: Fidelity HSA Investments

Post by bubbly »

Olemiss540 wrote: Mon Aug 24, 2020 10:25 am I am using fidelity's zero fee based US equity fund FZROX. I dont hold REITs and believe in holding my bond allocation inside my 401k so the HSA grows as much as possible due to its favorable tax treatment.
Thanks for making me double check this. I had a small balance so this wasn't such a big deal but I was using the SP500 index FXAIX with ER 0.015%.
Hidden under the "Show additional eligible funds*" checkbox option was the zero ER fund. I immediately made the switch today. :sharebeer
Jay Wiser
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Joined: Wed Nov 23, 2016 6:01 pm

Re: Fidelity HSA Investments

Post by Jay Wiser »

Fidelity allows you to invest in the Institutional Premium Class of their Fidelity Freedom Index target retirement date funds in their HSA. At age 28, I would suggest the 2060 fund. 0.08% in fees to follow their glide path.
Olemiss540
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Joined: Fri Aug 18, 2017 8:46 pm

Re: Fidelity HSA Investments

Post by Olemiss540 »

bubbly wrote: Mon Aug 24, 2020 11:50 am
Olemiss540 wrote: Mon Aug 24, 2020 10:25 am I am using fidelity's zero fee based US equity fund FZROX. I dont hold REITs and believe in holding my bond allocation inside my 401k so the HSA grows as much as possible due to its favorable tax treatment.
Thanks for making me double check this. I had a small balance so this wasn't such a big deal but I was using the SP500 index FXAIX with ER 0.015%.
Hidden under the "Show additional eligible funds*" checkbox option was the zero ER fund. I immediately made the switch today. :sharebeer
Glad to help!
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
jbmitt
Posts: 541
Joined: Mon Jul 14, 2008 1:00 am

Re: Fidelity HSA Investments

Post by jbmitt »

Olemiss540 wrote: Mon Aug 24, 2020 3:06 pm
bubbly wrote: Mon Aug 24, 2020 11:50 am
Olemiss540 wrote: Mon Aug 24, 2020 10:25 am I am using fidelity's zero fee based US equity fund FZROX. I dont hold REITs and believe in holding my bond allocation inside my 401k so the HSA grows as much as possible due to its favorable tax treatment.
Thanks for making me double check this. I had a small balance so this wasn't such a big deal but I was using the SP500 index FXAIX with ER 0.015%.
Hidden under the "Show additional eligible funds*" checkbox option was the zero ER fund. I immediately made the switch today. :sharebeer
Glad to help!
I also just swapped FFNOX for FZROX in a HSA. I never considered the bond allocation within the HSA.
pasadena
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Joined: Sat Jul 02, 2016 1:23 am
Location: Washington State

Re: Fidelity HSA Investments

Post by pasadena »

Figure out your desired AA, then invest accordingly. You can definitely allocate funds in a tax-optimized way, but that comes after the global AA.

Are there REIT in yout AA? If yes then maybe they should go in your HSA - or your Roth IRA.
Olemiss540
Posts: 1540
Joined: Fri Aug 18, 2017 8:46 pm

Re: Fidelity HSA Investments

Post by Olemiss540 »

jbmitt wrote: Mon Aug 24, 2020 5:31 pm
Olemiss540 wrote: Mon Aug 24, 2020 3:06 pm
bubbly wrote: Mon Aug 24, 2020 11:50 am
Olemiss540 wrote: Mon Aug 24, 2020 10:25 am I am using fidelity's zero fee based US equity fund FZROX. I dont hold REITs and believe in holding my bond allocation inside my 401k so the HSA grows as much as possible due to its favorable tax treatment.
Thanks for making me double check this. I had a small balance so this wasn't such a big deal but I was using the SP500 index FXAIX with ER 0.015%.
Hidden under the "Show additional eligible funds*" checkbox option was the zero ER fund. I immediately made the switch today. :sharebeer
Glad to help!
I also just swapped FFNOX for FZROX in a HSA. I never considered the bond allocation within the HSA.
I am on a roll!
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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