Best HSA for buy-&-hold?

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TnGuy
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Best HSA for buy-&-hold?

Post by TnGuy »

Hello:

Starting January 1st, my wife and I will be eligible (for the first time) to invest in a HSA. My plan is fully-fund it right away, treat it as a long-term investment and not touch the funds (barring emergency) until post-retirement. With that in mind, I am hoping to find a company that has low costs/fees and also offers enough mutual fund/ETF choices that I could set up a portfolio with good asset diversification.

I'm hoping that those here with HSA investing experience can help point me in the right direction. Thank you very much for all of your help.


David
"Money will not make you happy. And happy will not make you money." - Groucho Marx
terran
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Re: Best HSA for buy-&-hold?

Post by terran »

One thing to note is if this is for employer sponsored health insurance and they offer payroll deducted HSA contributions you may wish to go that route using whatever custodian they support as payroll deducted HSA contributions often avoid FICA which direct HSA contributions do not. You can always roll out to whatever other custodian you get recommendations for though.
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TnGuy
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Re: Best HSA for buy-&-hold?

Post by TnGuy »

Thanks for your response. No, this is one that is not employer-sponsored - we will be choosing our own custodian, funding it ourselves and dealing with the tax aspects on the 1040 thereafter.


David
"Money will not make you happy. And happy will not make you money." - Groucho Marx
essmjay
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Re: Best HSA for buy-&-hold?

Post by essmjay »

I use HSABank. I am able to use TDAmeritrade through the account for investing in mutual funds. Works for me. I keep 5 grand in cash reserves and invest the rest.

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indexfundfan
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Re: Best HSA for buy-&-hold?

Post by indexfundfan »

Fees are still very common in HSAs if you want to have investment options.

The three best HSA custodians that support first dollar investing are

1) Lively, $2.50/month fee with investments through TD Ameritrade using commission-free SPDR Portfolio ETFs

2) Saturna -- fees follow either a) or b) below, depending on whether you use ETFs or mutual funds
a) $15 per ETF trade; if no trade, $25 inactivity fee per calendar year
b) $25 per Vanguard mutual fund trade; if no trade, $12.5 inactivity fee per calendar year

3) HSA Authority, $36/year, Vanguard mutual funds

Other custodians either require you to have a cash balance to waive some fees or charge an AUM fee.
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jhfenton
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Re: Best HSA for buy-&-hold?

Post by jhfenton »

indexfundfan wrote: Wed Dec 13, 2017 6:33 pm 1) Lively, $2.50/month fee with investments through TD Ameritrade using commission-free SPDR Portfolio ETFs.
Lively is the one I'm using now (since early October). At $2.50/month and no other fees, it's the lowest cost for me given a desire to minimize cash in my employer HSA by making frequent (quarterly) transfers. (Lively takes the $2.50/month from a linked checking account, not from precious HSA funds.) It was incredibly easy to set up, entirely online, and their customer service is quick and responsive. TD Ameritrade has 296 ETFs on their commission-free list, but 90% are not worth considering. The SPDR Portfolio Core funds cover most asset classes at ERs lower than Vanguard, and there are a few other reasonably-priced funds worth considering if you want something more esoteric. Otherwise, stock/ETF commissions at TD Ameritrade are $6.95.

SelectAccount would probably be my second choice. Schwab brokerage. I forget all the details. Saturna would probably be my third.

Saturna's transaction fees would result in a lot more cash drag for me at my workplace HSA. (I don't want any cash sitting in an HSA earning 0.25%.) But if you're contributing directly once a year, Saturna could be a more attractive choice. (They have numerous paper forms to be completed and mailed in, so I'd still probably go with Lively for the convenience. I just feel like they're not going to be as easy to work with as Lively.) Saturna also has a $75 account transfer/closure fee when you are ready to walk out the door.
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Re: Best HSA for buy-&-hold?

Post by indexfundfan »

jhfenton wrote: Wed Dec 13, 2017 7:01 pm
indexfundfan wrote: Wed Dec 13, 2017 6:33 pm 1) Lively, $2.50/month fee with investments through TD Ameritrade using commission-free SPDR Portfolio ETFs.
Lively is the one I'm using now (since early October). At $2.50/month and no other fees, it's the lowest cost for me given a desire to minimize cash in my employer HSA by making frequent (quarterly) transfers. (Lively takes the $2.50/month from a linked checking account, not from precious HSA funds.) It was incredibly easy to set up, entirely online, and their customer service is quick and responsive. TD Ameritrade has 296 ETFs on their commission-free list, but 90% are not worth considering. The SPDR Portfolio Core funds cover most asset classes at ERs lower than Vanguard, and there are a few other reasonably-priced funds worth considering if you want something more esoteric. Otherwise, stock/ETF commissions at TD Ameritrade are $6.95.

SelectAccount would probably be my second choice. Schwab brokerage. I forget all the details. Saturna would probably be my third.

Saturna's transaction fees would result in a lot more cash drag for me at my workplace HSA. (I don't want any cash sitting in an HSA earning 0.25%.) But if you're contributing directly once a year, Saturna could be a more attractive choice. (They have numerous paper forms to be completed and mailed in, so I'd still probably go with Lively for the convenience. I just feel like they're not going to be as easy to work with as Lively.) Saturna also has a $75 account transfer/closure fee when you are ready to walk out the door.
I am currently using Saturna. I setup the Saturna account just before I read about Lively and started the Lively thread on the forums here.

I might move to Lively and close out Saturna. I believe if I do a withdrawal (instead of a trustee-to-trustee transfer), I might avoid the $75 closure fee. I have yet to do much investigation on this.
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Re: Best HSA for buy-&-hold?

Post by indexfundfan »

jhfenton wrote: Wed Dec 13, 2017 7:01 pm SelectAccount would probably be my second choice. Schwab brokerage. I forget all the details. Saturna would probably be my third.
From my notes earlier, you can start the Schwab brokerage at SelectAccount only after you have reached $10,000 in cash. You are then required to keep at least $1000 in cash.
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jhfenton
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Re: Best HSA for buy-&-hold?

Post by jhfenton »

indexfundfan wrote: Wed Dec 13, 2017 7:26 pm
jhfenton wrote: Wed Dec 13, 2017 7:01 pm SelectAccount would probably be my second choice. Schwab brokerage. I forget all the details. Saturna would probably be my third.
From my notes earlier, you can start the Schwab brokerage at SelectAccount only after you have reached $10,000 in cash. You are then required to keep at least $1000 in cash.
That sounds right. The $10,000 wouldn't have been a concern for me, as I've had my HSA for several years, but I remember including the cash drag on the $1,000 in my calculations. I also remember that SelectAccount was complicated, with multiple options offering different interest rates for different fees.

I didn't know about SelectAccount in October, so I would probably have move my HSA to Saturna if Lively hadn't appeared right when I needed them. When I looked at my September statement in my workplace HSA and saw how much I paid in investment fees for Q3, I decided it was time. They had increased our quarterly investment fee from 2.5 bp to 5 bp (20 bp/yr) over the summer. So my investment fee for the third quarter was over $20. And that's in addition to $2/month and keeping $2,000 in cash. It would have been $115/year.

Now I'm paying $30/year from outside the HSA and have $0-1,500 in cash (accumulating in between quarterly transfers).
Finridge
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Re: Best HSA for buy-&-hold?

Post by Finridge »

I am with HealthSavings Administrators. They have an annual administrative fee of $45, and also a custodial fee of 6.25 basis points per quarter ($0.625 per $1000 every three months).

On a $10,000 balance, the fees come out to $70 per year.

This was the best deal I could find when I opened it. I will look into Lively.
asif408
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Re: Best HSA for buy-&-hold?

Post by asif408 »

I was with HSA Bank but transferred to Lively recently. If you're not concerned about the fact that Lively is very new to the HSA world, then they are the best deal ($30/year deducted from an outside bank account, no other fees other than expense ratios of funds if you stick to the commission free list). HSA Bank has been around longer and is comparable in that they both offer the TDAmeritrade account with commission free ETFs, but their fees are $66/year, vs. $30/year with Lively, and the fees for HSA Bank comes from the HSA account. I like the fact that I can have all the money at Lively invested. At HSA Bank, I always had to have some loose cash in the account to cover the fees.

My experience with both has been good, I just prefer cheaper when most everything else is equal. Compared to other companies, they both had many more options (such as short-term bond funds, and a more diverse selection of core funds) than some of the other companies I looked at. I also liked the fact that with the TDAmeritrade account I didn't have to pay commissions each time I bought or sold or had limitations other than the 30-day short term trading fee that TDAmeritrade imposes.
jon7417
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Re: Best HSA for buy-&-hold?

Post by jon7417 »

Select account. I ditched hsa bank and tda this year.
At select, $18/year basic investing fee and i use VG target retirement fund. Many other low cost options
I get basic bank account that is $1/month.
They require $1k bank base balance
terran
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Re: Best HSA for buy-&-hold?

Post by terran »

asif408 wrote: Wed Dec 13, 2017 10:21 pm I was with HSA Bank but transferred to Lively recently.
Did HSA Bank charge you a fee to transfer and close the account?
J295
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Re: Best HSA for buy-&-hold?

Post by J295 »

We use HSA bank and have been very satisfied. Skimming the other threads, perhaps there are slightly less expensive choices; however, HSA bank has been very convenient and for the nominal differences involved dollarwise we will keep it there
asif408
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Re: Best HSA for buy-&-hold?

Post by asif408 »

terran wrote: Thu Dec 14, 2017 12:58 am
asif408 wrote: Wed Dec 13, 2017 10:21 pm I was with HSA Bank but transferred to Lively recently.
Did HSA Bank charge you a fee to transfer and close the account?
To close the account they did. Since I had only a few dollars below the closure fee left in my account, they didn't charge me the full closure fee but used the remaining balance (a nice gesture on their part). They didn't charge me any fees to transfer funds.
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TnGuy
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Re: Best HSA for buy-&-hold?

Post by TnGuy »

Thank you all for your replies and help. It looks like Lively will be the best option for my situation.


David
"Money will not make you happy. And happy will not make you money." - Groucho Marx
oslocal
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Re: Best HSA for buy-&-hold?

Post by oslocal »

asif408 wrote: Thu Dec 14, 2017 7:35 am
terran wrote: Thu Dec 14, 2017 12:58 am
asif408 wrote: Wed Dec 13, 2017 10:21 pm I was with HSA Bank but transferred to Lively recently.
Did HSA Bank charge you a fee to transfer and close the account?
To close the account they did. Since I had only a few dollars below the closure fee left in my account, they didn't charge me the full closure fee but used the remaining balance (a nice gesture on their part). They didn't charge me any fees to transfer funds.
Similar experience. I asked them to mail me a rollover check for the full amount in the account, then when there was $0 left in the account I closed it. So no fee. I then sent a separate check to Optum Bank where I'm making contributions via payroll.
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Re: Best HSA for buy-&-hold?

Post by oslocal »

jhfenton wrote: Wed Dec 13, 2017 8:27 pm
indexfundfan wrote: Wed Dec 13, 2017 7:26 pm
jhfenton wrote: Wed Dec 13, 2017 7:01 pm SelectAccount would probably be my second choice. Schwab brokerage. I forget all the details. Saturna would probably be my third.
From my notes earlier, you can start the Schwab brokerage at SelectAccount only after you have reached $10,000 in cash. You are then required to keep at least $1000 in cash.
That sounds right. The $10,000 wouldn't have been a concern for me, as I've had my HSA for several years, but I remember including the cash drag on the $1,000 in my calculations. I also remember that SelectAccount was complicated, with multiple options offering different interest rates for different fees.

I didn't know about SelectAccount in October, so I would probably have move my HSA to Saturna if Lively hadn't appeared right when I needed them. When I looked at my September statement in my workplace HSA and saw how much I paid in investment fees for Q3, I decided it was time. They had increased our quarterly investment fee from 2.5 bp to 5 bp (20 bp/yr) over the summer. So my investment fee for the third quarter was over $20. And that's in addition to $2/month and keeping $2,000 in cash. It would have been $115/year.

Now I'm paying $30/year from outside the HSA and have $0-1,500 in cash (accumulating in between quarterly transfers).
How do you make the transfers? Are they free? I'm considering doing this, because Optum requires a $2000 minimum balance with 0% interest before investing, and then charges me a monthly fee of $3 as well. Another problem is the only Treasury/TIPS fund is a PIMCO Real Return which isn't very cheap.
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Re: Best HSA for buy-&-hold?

Post by jhfenton »

oslocal wrote: Wed Jan 31, 2018 1:05 am
jhfenton wrote: Wed Dec 13, 2017 8:27 pm Now I'm paying $30/year from outside the HSA and have $0-1,500 in cash (accumulating in between quarterly transfers).
How do you make the transfers? Are they free? I'm considering doing this, because Optum requires a $2000 minimum balance with 0% interest before investing, and then charges me a monthly fee of $3 as well. Another problem is the only Treasury/TIPS fund is a PIMCO Real Return which isn't very cheap.
Lively faxes a transfer form to my employer-sponsored custodian, Fifth-Third Bank. I'm lucky that 5th-3rd processes the transfers quickly and promptly mails a check to Lively's bank in San Francisco. I've done it twice so far, and it takes about a week and a half for the money to show up at Lively, most of that with the check in the mail. 5th-3rd does not charge a transfer fee as long as I leave a few dollars behind to keep the account open (which I have to do anyway for my payroll contributions).

The first time I asked Lively about a trustee-to-trustee transfer, they emailed back a list of information they needed to prepare the transfer form. The second time, I knew what they needed, so I just provided it. They prepare the form and send a link for me to e-sign it. The Lively part of it all happens within a day.

A lot of custodians do charge transfer fees. You can usually do a cash-in-hand rollover to get around that, but you can only do that once per year.
92irish
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Re: Best HSA for buy-&-hold?

Post by 92irish »

Another new (and happy) Lively customer here. I really like their website, but best of all low cost for a buy & hold person with a linked TD Ameritrade account.

I switched from HSA Bank and process was easy (and quick). I only had a few dollars in HSA Bank ($22 bucks to be exact) with everything at TD Ameritrade. That made the process easier so there was no money at the bank to transfer over to Lively - it was just TD Ameritrade. Anyone transferring from HSA Bank I'd recommend just having $20 bucks or so to cover the account closure fee and then your done.
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Re: Best HSA for buy-&-hold?

Post by AHTFY »

Thanks in large part to this thread, I am currently moving my money from HSA Bank, where I was earning a measly 0.1% interest, to Lively, where I will invest in a mix of SPTM, SPDW, and SPEW to mimic the Vanguard Total World. Previously, my HSA money was part of my emergency fund, but I was able to increase my cash in taxable accounts to do free up this money to be invested.

Thanks for all the advice on this thread.
Redtees
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Re: Best HSA for buy-&-hold?

Post by Redtees »

I'm another self-employed happy Lively customer. Very easy to set up...all online.

One other aspect I like about Lively is the ability to take a photo of my medical receipts and store them online until the eventual day I will submit them for reimbursement. (I keep the back up in my files, as well.) So easy to take a snap and show the running total.

I like TD Ameritrade for their cheap Total Stock Market ETF @ .03ER, too.
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