HSA allocation amounts and portfolio

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Topic Author
jco
Posts: 48
Joined: Sat Jan 25, 2020 8:53 am

HSA allocation amounts and portfolio

Post by jco » Wed Feb 12, 2020 9:56 am

Based on a previous thread (viewtopic.php?f=1&t=302613&p=4995402#p4995402), I'm considering investing my HSA.

Details: Late 30s, married with many children. We use our HSA for all our health expenses, but we're running at a little over $6,000. Our family deductible is $3,000 annually, with a maximum out-of-pocket of $6,000. Our account is through Optum Bank for employer reasons. Currently, the interest rate is 0.15%.

Goals: Trying to improve the account earnings. I'm willing to take a little risk but not much. I'm NOT trying to use this as an extension of our retirement accounts.

Current thoughts: I'll be honest, I'm a little leery about investing HSA funds. I'd like to grow the funds if possible, but I'm not willing to take much risk. If I invest, I would probably choose a relatively small portion of the fund (say $1,000) that we could afford to lose. It seems like we have some solid, Boglehead-friendly options through Optum Bank. The solid options are provided below and will be familiar to many of the boards regular users. I'm thinking that based on my risk adverseness (at least for this account) perhaps a bond fund would be a good choice.

My questions: Should I currently invest my HSA funds? If so, does the amount I suggested make sense? In what should I invest the funds?

Thanks for your help!

Code: Select all

Schwab Target 2020 Index Fund I		SWYLX	Large Blend
Schwab Target 2030 Index Fund I		SWYEX	Large Blend
Schwab Target 2040 Index Fund I		SWYGX	Large Blend
Schwab Target 2050 Index Fund I		SWYMX	Large Blend
Schwab Target 2060 Index Fund I		SWYNX	Large Blend
Vanguard Equity-Income - A		VEIRX	Large Cap Value
Vanguard Extended Market Index Inst	VIEIX	Mid Cap Index
Vanguard Inflation-Protected Inst	VIPIX	Inflation-protected Bond
Vanguard Life Strategy-Growth		VASGX	Aggressive Allocation
Vanguard LifeStrategy-Cons Growth	VSCGX	Conservative Allocation
Vanguard LifeStrategy-Moderate Growth	VSMGX	Moderate Allocation
Vanguard Mid Cap Index Inst		VMCIX	Mid Cap Blend
Vanguard REIT Index Inst		VGSNX	Alternative Blend
Vanguard S&P 500 Index - A		VFIAX	Indexed
Vanguard Short-Term Federal Adm		VSGDX	Short Term Bond
Vanguard Short-Term Invest Grade Inst	VFSIX	Short Term Bond
Vanguard Small Cap Index Inst		VSCIX	Small Cap Index
Vanguard Total Bond Mkt Port		VBTIX	Fixed Income
Vanguard Total Stock Market Inst	VITSX	Large Cap Blend
Vanguard Wellington - A			VWENX	Equity

bloom2708
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Location: Fargo, ND

Re: HSA allocation amounts and portfolio

Post by bloom2708 » Wed Feb 12, 2020 11:09 am

I invested some of our HSA savings for 1 year.

I ended up putting it back in the regular/non-invested savings area.

We too use ours and the amount is not enough where stellar earnings will move the needle.

Maybe if your fund grows you would feel you could invest some. As it stands now, I would just leave it be.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words: Whole food, plant based

retired@50
Posts: 1402
Joined: Tue Oct 01, 2019 2:36 pm

Re: HSA allocation amounts and portfolio

Post by retired@50 » Wed Feb 12, 2020 11:17 am

I'd put any money you expect to need in the next year or two in "Vanguard Short-Term Federal Adm (VSGDX) Short Term Bond".

Settling for .15% interest is insulting. Without really noticing, you're likely losing money to inflation.


Regards,
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

Independent George
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Joined: Wed Feb 17, 2016 12:13 pm
Location: Chicago, IL, USA

Re: HSA allocation amounts and portfolio

Post by Independent George » Wed Feb 12, 2020 11:18 am

Can you afford to pay your medical expenses in cash while leaving your HSA alone? That's the main benefit of the HSA - not for paying expenses today, but leaving it to grow untouched until you have larger medical expenses when you are older. It's worth it to reduce your 401k (above the match) to put that amount into your HSA, and treat it as part of your overall portfolio.

Topic Author
jco
Posts: 48
Joined: Sat Jan 25, 2020 8:53 am

Re: HSA allocation amounts and portfolio

Post by jco » Wed Feb 12, 2020 12:14 pm

bloom2708 wrote:
Wed Feb 12, 2020 11:09 am
Maybe if your fund grows you would feel you could invest some. As it stands now, I would just leave it be.
Thank you for the advice. Sounds like we're in similar situations.
retired@50 wrote:
Wed Feb 12, 2020 11:17 am
I'd put any money you expect to need in the next year or two in "Vanguard Short-Term Federal Adm (VSGDX) Short Term Bond".
Thank you for the recommendation. I'll look into that fund more.
Independent George wrote:
Wed Feb 12, 2020 11:18 am
Can you afford to pay your medical expenses in cash while leaving your HSA alone?
Maybe to some extent, but it would be an unnecessary stressor I think. We've never had outrageous medical bills (thankfully) but we have frequent doctor visits for our children for the random day-to-day medical needs. Using the HSA as a retirement fund is a long-term goal, but I just don't think it's realistic with our current state-of-life.

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anon_investor
Posts: 1000
Joined: Mon Jun 03, 2019 1:43 pm

Re: HSA allocation amounts and portfolio

Post by anon_investor » Wed Feb 12, 2020 12:17 pm

retired@50 wrote:
Wed Feb 12, 2020 11:17 am
I'd put any money you expect to need in the next year or two in "Vanguard Short-Term Federal Adm (VSGDX) Short Term Bond".

Settling for .15% interest is insulting. Without really noticing, you're likely losing money to inflation.


Regards,
+1 to this suggestion based on your current life situation.

Independent George
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Joined: Wed Feb 17, 2016 12:13 pm
Location: Chicago, IL, USA

Re: HSA allocation amounts and portfolio

Post by Independent George » Wed Feb 12, 2020 12:25 pm

jco wrote:
Wed Feb 12, 2020 12:14 pm
Maybe to some extent, but it would be an unnecessary stressor I think. We've never had outrageous medical bills (thankfully) but we have frequent doctor visits for our children for the random day-to-day medical needs. Using the HSA as a retirement fund is a long-term goal, but I just don't think it's realistic with our current state-of-life.
Nothing wrong with that - in that case, I'd just leave the HSA into the money market and not worry about investing it. Maybe you can invest it into the short-term bond funds just so that you get more than .15%, but I would not take much risk with it if you are using it to pay medical expenses.

Jablean
Posts: 497
Joined: Sat Jun 02, 2018 2:38 pm

Re: HSA allocation amounts and portfolio

Post by Jablean » Thu Feb 13, 2020 7:05 pm

You could do bonds but remember they can lose money too. You should be able to find a money market fund in there that will at least give you returns above 1.5%.

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mmmodem
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Re: HSA allocation amounts and portfolio

Post by mmmodem » Thu Feb 13, 2020 7:55 pm

We keep our HSA in VITSX and have it automatically invested when the balance exceeds the $1000 minimum balance. We had $6000 (new baby) worth of expenses last year. Simply, we use our HSA to pay medical bills. When the bill exceeds the balance in the account, we pay out of pocket. We then get reimbursed when the account replenishes. If I was risk averse, I would just invest in VBTIX.

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