HSA Investing

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Unbrokenspark
Posts: 4
Joined: Thu Nov 21, 2019 5:29 pm

HSA Investing

Post by Unbrokenspark » Sun Dec 01, 2019 5:25 pm

Hey All

I am going to start investing into my HSA and was just wondering about which funds to choose. I'm 25 years old.

I have roughly 42k in work 401k and 11K in Roth IRA invested in indexs and mutual funds.

So heres my option in my HSA plan.

Cohen & Steers Real Estate Securities Z (CSZIX) Real Estate link 32.37 28.80 11.77 10.85 14.93 12.88 0.79
DFA Emerging Markets I (DFEMX) Diversified Emerging Mkts link 8.94 11.06 6.80 2.77 4.27 6.64 0.57
DFA International Core Equity I (DFIEX) Foreign Large Blend link 15.35 7.67 7.36 4.46 5.91 4.85 0.30
Diamond Hill Large Cap I (DHLRX) Large Value link 24.66 14.81 13.33 9.81 12.33 9.24 0.67
Fidelity Low-Priced Stock (FLPSX) Mid-Cap Value link 15.35 6.91 9.63 6.49 11.64 13.10 0.52
MainStay MacKay High Yield Corp Bd I (MHYIX) High Yield Bond link 10.38 7.68 5.44 5.33 7.13 6.74 0.74
PIMCO International Bond (USD-Hdg) Instl (PFORX) World Bond-USD Hedged link 7.58 8.06 4.52 4.74 6.06 7.18 0.55
PIMCO Low Duration Income Instl (PFIIX) Short-Term Bond link 5.04 5.03 4.79 3.82 4.27 3.86 0.59
Principal MidCap Institutional (PCBIX) Mid-Cap Growth link 36.74 29.61 18.38 13.09 16.63 11.39 0.69
T. Rowe Price Blue Chip Growth I (TBCIX) Large Growth link 21.28 14.57 19.51 13.96 16.24 14.90 0.57
Vanguard 500 Index Admiral (VFIAX) Large Blend link 23.14 14.30 14.87 10.74 13.66 6.42 0.04
Vanguard Developed Markets Index Admiral (VTMGX) Foreign Large Blend link 16.31 10.50 8.27 4.38 5.66 4.12 0.07
Vanguard Health Care Adm (VGHAX) Health link 12.39 8.24 11.50 7.50 14.35 10.37 0.28
Vanguard Inflation-Protected Secs Adm (VAIPX) Inflation-Protected Bond link 7.48 8.51 2.19 2.20 3.24 3.64 0.10
Vanguard LifeStrategy Cnsrv Gr Inv (VSCGX) Allocation--30% to 50% Equity link 13.13 11.94 6.94 5.36 6.70 6.89 0.12
Vanguard LifeStrategy Growth Inv (VASGX) Allocation--70% to 85% Equity link 17.38 12.34 10.17 7.01 9.48 8.03 0.14
Vanguard LifeStrategy Moderate Gr Inv (VSMGX) Allocation--50% to 70% Equity link 15.27 12.20 8.57 6.23 8.19 7.60 0.13
Vanguard Mid Cap Index Admiral (VIMAX) Mid-Cap Blend link 23.95 14.39 12.24 8.70 13.68 9.88 0.05
Vanguard Real Estate Index Admiral (VGSLX) Real Estate link 29.52 24.87 9.56 8.10 13.54 10.78 0.12
Vanguard Short-Term Federal Adm (VSGDX) Short Government link 4.03 5.33 1.80 1.65 1.67 3.12 0.10
Vanguard Small Cap Index Adm (VSMAX) Small Blend link 19.68 8.70 11.76 8.02 13.33 8.93 0.05
Vanguard Target Retirement 2020 Inv (VTWNX) Target-Date 2020 link 14.15 11.62 8.13 5.93 8.27 6.32 0.13
Vanguard Target Retirement 2030 Inv (VTHRX) Target-Date 2030 link 16.32 12.28 9.57 6.69 9.33 6.68 0.14
Vanguard Target Retirement 2040 Inv (VFORX) Target-Date 2040 link 17.86 12.37 10.77 7.24 10.08 7.05 0.14
Vanguard Target Retirement 2050 Inv (VFIFX) Target-Date 2050 link 18.42 12.39 10.97 7.36 10.15 7.13 0.15
Vanguard Target Retirement 2060 Inv (VTTSX) Target-Date 2060+ link 18.41 12.40 10.97 7.33 N/A 9.93 0.15
Vanguard Target Retirement Income Inv (VTINX) Target-Date Retirement link 11.16 10.54 5.76 4.53 5.86 5.31 0.12
Vanguard Total Bond Market Index Adm (VBTLX) Intermediate Core Bond link 8.92 11.48 3.25 3.20 3.67 4.26 0.05
Vanguard Treasury Money Market Investor (VUSXX) Money Market - Taxable link 1.85 2.23 1.50 0.94 0.48 2.46 0.09
Virtus KAR Small-Cap Growth I (PXSGX) Small Growth link 33.46 30.96 28.37 21.26 19.40 12.70 1.14
Western Asset Core Plus Bond I (WACPX) Intermediate Core-Plus Bond link 11.82 14.69 4.98 4.69 5.81 6.13 0.52


Let me know what ya think and what kinda of strategy I should have with an HSA Account.

fabdog
Posts: 786
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: HSA Investing

Post by fabdog » Sun Dec 01, 2019 5:44 pm

So what does your investment policy say?

How is your 401K and your Roth invested?

For an HSA strategy, depending on your other liquid funds... I would keep at least 50% of my deductible in cash/mm, and then invest the rest in line with my investment policy.

So if you're 90% stocks/10% bonds, and have money going into 401 and Roth, what investment in the HSA would keep you aligned to that balance?

You could go with one of the Vanguard Target funds (2060) or 500 index and Total bond in the desired proportion

I'd shy away from the non vanguard funds in this menu

Mike

User avatar
FIREchief
Posts: 3640
Joined: Fri Aug 19, 2016 6:40 pm

Re: HSA Investing

Post by FIREchief » Sun Dec 01, 2019 9:24 pm

That list gives me a headache....

If you're planning to use your HSA as a longer term investment tool, just stick everything in that VG S&P 500 index fund and forget about it. 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.

User avatar
dogagility
Posts: 634
Joined: Fri Feb 24, 2017 6:41 am

Re: HSA Investing

Post by dogagility » Sun Dec 01, 2019 9:36 pm

FIREchief wrote:
Sun Dec 01, 2019 9:24 pm
If you're planning to use your HSA as a longer term investment tool, just stick everything in that VG S&P 500 index fund and forget about it. 8-)
I agree. If your HSA is a long-term investment and you plan to cash-flow health care expenses, then invest the HSA aggressively. 100% in a low cost equity index like VFIAX. The reason for doing so is that the HSA account is triple tax advantaged. You won't pay tax on the contributions or principal growth at any point. It is one of the best retirement savings vehicles you have in your investment arsenal.

I you plan to use the HSA for current or near future health care expenses, then investing in a less volatile bond index fund (VBTLX) would be appropriate.
Taking "risk" since 1995.

snailderby
Posts: 453
Joined: Thu Jul 26, 2018 11:30 am

Re: HSA Investing

Post by snailderby » Mon Dec 02, 2019 10:45 am

Welcome to the forum! It sounds like you're off to a great start.

I would consider the following funds in your HSA plan, especially the three funds bolded below:

DFA International Core Equity I (DFIEX) Foreign Large Blend (0.30% ER)
DFA Emerging Markets I (DFEMX) Diversified Emerging Mkts (0.57% ER)
Vanguard 500 Index Admiral (VFIAX) Large Blend (0.04% ER)
Vanguard Developed Markets Index Admiral (VTMGX) Foreign Large Blend (0.07% ER)
Vanguard Mid Cap Index Admiral (VIMAX) Mid-Cap Blend (0.05% ER)
Vanguard Small Cap Index Adm (VSMAX) Small Blend (0.05% ER)
Vanguard Total Bond Market Index Adm (VBTLX) Intermediate Core Bond (0.05% ER)

Alternatively, you could simply dump everything into one of these two funds:

Vanguard LifeStrategy Growth Inv (VASGX) (0.14% ER)
Vanguard Target Retirement 2060 Inv (VTTSX) (0.15% ER)

Either way, if possible, I would try to treat your HSA as a long-term investment vehicle.

carmonkie
Posts: 149
Joined: Fri Jun 29, 2018 4:31 pm

Re: HSA Investing

Post by carmonkie » Mon Dec 02, 2019 4:13 pm

Good on starting your HSA savings this early. I would read the fine print of your HSA plan and understand the fees. Most likely you are going to have trustee fee that could range anywhere from 0.25% all the way to 1% or sometimes more. This money comes directly from the investments. Mine is 0.25% spread over 4 quarters and every quarter it got deducted from the fund balance.

If there are no transfer fees, you can always keep the cash in your current HSA (use the debit card) and open an HSA in Fidelity and pick their 0 cost Mutual funds. I am in the process of doing this myself. Lucky for me, my HSA does not charge any transfer or rollover fees. Some HSA charge $30 or more per transaction so that makes it less desirable. You can only make one rollover per year (check is paid to you and then you send it in), but you can make unlimited transfers during the year. (you never get the funds/Trustee to Trustee)

I believe a lot of people here went with Fidelity when they started offering HSAs for this reason.

Topic Author
Unbrokenspark
Posts: 4
Joined: Thu Nov 21, 2019 5:29 pm

Re: HSA Investing

Post by Unbrokenspark » Tue Dec 03, 2019 12:48 pm

Hey all,

Thanks everyone for your responses!

Yes this list gave me a headache as well. I'm just starting to learn about stocks and kinda get nerdy with it. I read both policies regarding fees and this is through my work so I have two option TD Ameritrade or Devenir.

I contribute 1200$ and my employer contributes 1800$ per year which im considering uping my contribution to match my employers. I'm currently investing 20% (with employer match) in my 401k and Roth IRA. (My Roth is with a Locally owned Broker invested in Mutual funds)

I have 5K in savings as an emergency fund and my deductible is 6K for family medical. I plan on using this as a long term investment and cash flow medical expenses. My house will be paid off in 2020 so that will free up an extra 3-400$ a month. (No consumer debt as well)

TD has trading fees and Devenir does not.
Devenir has .30% annual MFSIA .75 cents per 1000$ quarterly but i think thats if i use one of there brokers? im not sure.

So from what i gathered you guys would just put it in VFIAX and or a VTMGX VBTLX. Why not FLPSX? I know its not vanguard but it seems to be a little higher return. I will say my 401k is not the most diversified portfolio just started adding foreign and bonds to it so maybe with this HSA i go more diversified.

Let me know any feedback and thanks all who replied I appreciate it!!!!

snailderby
Posts: 453
Joined: Thu Jul 26, 2018 11:30 am

Re: HSA Investing

Post by snailderby » Tue Dec 03, 2019 1:39 pm

Unbrokenspark wrote:
Tue Dec 03, 2019 12:48 pm
I contribute 1200$ and my employer contributes 1800$ per year which im considering uping my contribution to match my employers
Is this an employer match, or will your employer contribute $1800 per year no matter how much you contribute?
Unbrokenspark wrote:
Tue Dec 03, 2019 12:48 pm
I'm currently investing 20% (with employer match) in my 401k and Roth IRA. (My Roth is with a Locally owned Broker invested in Mutual funds)
If you share your 401(k) and Roth investments here, you may get more helpful feedback.
Unbrokenspark wrote:
Tue Dec 03, 2019 12:48 pm
I plan on using this as a long term investment and cash flow medical expenses. My house will be paid off in 2020 so that will free up an extra 3-400$ a month. (No consumer debt as well)
That's great.
TD has trading fees and Devenir does not. Devenir has .30% annual MFSIA .75 cents per 1000$ quarterly but i think thats if i use one of there brokers? im not sure.
You might want to nail that down and figure out exactly what fees you would be paying with each option.
So from what i gathered you guys would just put it in VFIAX and or a VTMGX VBTLX. Why not FLPSX? I know its not vanguard but it seems to be a little higher return.
First, there are many funds (from Vanguard, Fidelity, and other companies) that have lower expense ratios than FLPSX, and Morningstar has stated that a fund's “expense ratio is the most proven predictor of future fund returns." https://www.morningstar.com/articles/75 ... ilure.html.

Second, I wouldn't rely too much on past performance in selecting a fund. Studies have found that Morningstar Ratings, which "are a measure of a fund's risk-adjusted return, relative to similar funds," are not a great predictor of future returns. See www.wsj.com/articles/the-morningstar-mirage-1508946687 and https://papers.ssrn.com/sol3/papers.cfm ... _id=455240.

FLPSX is an interesting fund. It's part U.S. and part international. It targets stocks "priced at or below $35 per share or with an earnings yield at or above the median for the Russell 2000 Index." The result is a noticeable tilt toward smaller and more "valuey" stocks, with a particular bias toward mid-cap value stocks. I don't think it's a bad option, but only if you want that sort of tilt in your portfolio, and even then, there may be cheaper alternatives if you have access to iShares/SPDR/Vanguard ETFs.
Last edited by snailderby on Wed Dec 04, 2019 9:32 am, edited 2 times in total.

Chrono Triggered
Posts: 129
Joined: Wed Feb 17, 2016 12:55 pm

Re: HSA Investing

Post by Chrono Triggered » Tue Dec 03, 2019 2:08 pm

I'd personally go 100% Vanguard 500 Index Admiral (VFIAX).

Chris K Jones
Posts: 250
Joined: Sat Jan 20, 2018 6:54 pm

Re: HSA Investing

Post by Chris K Jones » Tue Dec 03, 2019 2:12 pm

Chrono Triggered wrote:
Tue Dec 03, 2019 2:08 pm
I'd personally go 100% Vanguard 500 Index Admiral (VFIAX).
Since you are 25, I would do S&P500 100%.

User avatar
grabiner
Advisory Board
Posts: 25373
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: HSA Investing

Post by grabiner » Tue Dec 03, 2019 11:11 pm

Since you are investing for health care expenses in retirement, you should invest the HSA as if it were part of your IRA; both accounts serve the same purpose. You could invest both accounts in target-date funds for the benefit of simplicity, or allocate across individual funds, but it doesn't matter much what goes where. (If you have a 401(k), it may matter what goes there, because few 401(k)s have low-cost options for every asset class.)

Do you live in CA or NJ? If so, and if bonds are part of your asset allocation, you may want to use Vanguard Inflation-Protected Securities. The reason is that CA and NJ do not recognize HSAs, and thus will tax dividends on any other investment. (NJ also exempts capital gains on Treasury funds from taxes.)

Otherwise, it makes sense to choose just one fund in the HSA for simplicity; 500 Index (and then hold small-caps in another account) or Developed Markets Index (and then hold US stock and bonds in another account) would be fine.

My own HSA is invested in a single fund (VFVA, Vanguard Factor Value ETF) because it is only 4% of my portfolio; since I want to hold much more than 4% of my portfolio in that fund, I also hold the same fund in my Roth IRA.
Wiki David Grabiner

Topic Author
Unbrokenspark
Posts: 4
Joined: Thu Nov 21, 2019 5:29 pm

Re: HSA Investing

Post by Unbrokenspark » Thu Dec 05, 2019 11:01 am

Hello,

I live in iowa

Well i decided to go with TD Ameritrade because they have no commission fees, so the list of funds above does not apply now. I can choose any ETF and Mutual fund now.

So my question is what to pick! I have to have a minimum of 1000$ in my hsabank account which i have in there. So I can either save money and buy into a mutual fund like VTSMX which i can setup automatically or buy VTI and have to mannually go in and fire orders.

Mutual Fund or ETF's...

snailderby
Posts: 453
Joined: Thu Jul 26, 2018 11:30 am

Re: HSA Investing

Post by snailderby » Thu Dec 05, 2019 11:38 am

Unbrokenspark wrote:
Thu Dec 05, 2019 11:01 am
Hello,

I live in iowa

Well i decided to go with TD Ameritrade because they have no commission fees, so the list of funds above does not apply now. I can choose any ETF and Mutual fund now.

So my question is what to pick! I have to have a minimum of 1000$ in my hsabank account which i have in there. So I can either save money and buy into a mutual fund like VTSMX which i can setup automatically or buy VTI and have to mannually go in and fire orders.

Mutual Fund or ETF's...
1. You can buy any ETF -- and some mutual funds -- commission free at TDA. (TDA still charges commissions for some mutual funds.)

2. This article in the Bogleheads wiki discusses some of the pros and cons of ETFs versus mutual funds.

3. If you decide to go with ETFs, check out VTI/VXUS/BND or ITOT/IXUS/AGG if you want to construct a three-fund portfolio in your HSA.

4. To get the best advice, consider editing your original post or starting a new thread using this template for asking portfolio questions. You will likely get better advice if you allow us to consider your investments as a whole rather than just evaluating the HSA portion of your investments.

Post Reply