How To Invest Hsa Funds In Stocks


Do All Hsas Have Monthly Fees

How To: Invest Your HSA Funds

Some HSA providers offer accounts without an annual or monthly account management fee. However, all providers who let you invest your HSA funds charge investment fees, and often more than one type. For example, you might pay an annual fee to your HSA provider for oversight of the underlying investments in your HSA, but you will also pay expense ratios that vary depending on the investments you choose.

Benefits Of Investing Your Hsa Dollars

  • Maximize your tax savings Because an HSA is a tax-advantaged account, the amount you contribute and any interest you accrue on the balance is not included in your taxable income. In addition, you are not taxed or penalized if you withdraw the funds at any time to pay for eligible health care expenses.
  • Earn more on your unused dollars Investing your HSA dollars allows you to select the funds that best fit your financial style and that may deliver the greatest potential return on your account balance.
  • Save for health care in retirement The money in your HSA belongs to you, no matter what. Whether you change jobs, change health plans or retire, your HSA and your HSA investment account stay with you. Use the money to pay for health care for you and your family now, or save it to pay for expenses in retirement.
  • Take control of your money and your investment activity With this self-directed HSA investment platform, you can have complete control over how much money you invest, when you invest and in what funds you invest. If investing is new to you, you can use the built-in planning and management tools available.
  • Options To Invest Your Hsa Funds

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    Your HSA is a smart investment vehicle that can play an important role in your wealth and retirement strategy. In addition to mutual funds, Optum Bank is now offering a new investment option: digitally managed investments with Betterment. Sign in and start investing.

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    How To Invest Hsa Funds Strategically

    For those who choose to invest their HSA funds, here are a few ways to invest strategically:

    • Make sure you take full advantage of any employer matching contributions. This will give you more money to use on qualified medical expenses and potentially free up more funds you can use to invest.
    • Contribute the maximum amount allowed to your HSA. For 2021, the maximum contribution limits are $3,600 for an individual and $7,200 for families. Individuals ages 55 and older can contribute an additional $1,000.
    • Consider how close you are to retirement as you decide on your HSA investments. If you have decades before you’ll retire, you might consider adding more aggressive mutual funds, ETFs, or stocks. If you’re only a few years from retiring, you’ll probably want to consider investing in less volatile alternatives such as bonds and dividend stocks.
    • Think of your HSA as a key component of your overall retirement strategy. Try to invest as much of your HSA money as possible while ensuring that you keep enough cash to cover your qualified medical expenses. Consider where your other retirement plans are invested as well to make sure that your HSA investments provide diversification.

    Of course, some individuals might determine that the best strategy for their HSA money is to not invest at all. Whether or not to invest HSA funds and how to invest those funds are decisions that only you can make for yourself and your family.

    Best Investment Options: Fidelity

    How To Invest Hsa Funds In Stocks

    Fidelity allows you to invest your HSA money into Fidelity mutual funds and index funds. Fidelity even offers a handful of fund options that are only available to clients with a Fidelity HSA, including Fidelity Health Savings Fund and Fidelity Health Savings Index Fund .

    • Invest your HSA into high-quality, low-cost Fidelity mutual funds and index funds

    • No account minimums or account management fees

    • Receive a debit card you can use to pay for eligible healthcare expenses

    • Underlying fund expenses apply when you invest your HSA money, and these vary

    • Some Fidelity HSA investment options come with expense ratios as high as 1.03%

    If youre looking for an HSA provider who has been around for a while, you might be interested to know that Fidelity was founded in 1946. However, we chose Fidelity for our ranking not for their longevity, but based on the fact you can invest your HSA funds in so many low-cost options aimed at long-term growth.

    Fidelity even offers two funds specifically for their HSA members, including Fidelity Health Savings Fund and Fidelity Health Savings Index Fund . FHSNX, in particular, has an expense ratio of just 0.24%, which makes it an affordable option for long-term investors who want to grow their HSA balances over time. Plus, Fidelity lets you choose from other investments laid out on their website, including dozens of funds from Fidelity, JP Morgan, Wells Fargo, T. Rowe Price, and others.

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    Is There A Penalty To Use Hsa Funds For Non

    If you need to withdraw the money from your HSA for non-medical expenses before the age of 65, you can do so. However, you can expect to fork over a lot of your proceeds right away. Specifically, youll have to pay a 20% penalty for withdrawing funds early as well as income taxes on the amounts you withdraw.

    Buy Real Estate With Reits

    In todays hot real estate market, $10,000 wont take you very far when it comes to buying property. But theres more than one way to invest in real estate.

    Try real estate investment trusts , for example, which are a type of publicly traded company that can give you exposure to many different types of property.

    Most REITs concentrate on one type of real estatelike commercial property or residential real estatealthough some own a variety of different types of property. To qualify as a REIT, companies must distribute at least 90% of their taxable income to shareholders, which also makes REITs a good way to generate income.

    Much like regular stocks, REITs are highly liquid. That makes it easy to cash out your investment and move your money elsewhere. Contrast that with owning physical real estate, where selling is a long, expensive process.

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    Can You Invest Your Hsa Money

    Many HSA administrators require a minimum balance in your account before allowing you to invest, so it’s possible you cannot. Check with your HSA administrator to find out if there’s a minimum balance required for your HSA before you can invest. Keep in mind, though, that just because you can invest your HSA money doesn’t mean that you necessarily should.

    Who Is Devenir And What Is Their Role With The Hsa Authority Investment Accounts

    How To Invest HSA For Beginners 2020 (Tax Free Millionaire)

    Devenir Investment Advisors, LLC, is an SEC registered investment advisor that was chosen by Old National Bankto research and select The HSA Authority Investment account mutual fund investment options. Devenirs investment selection methodology screens the plans mutual fund options on several criteria, which includes, but is not limited to, total fund performance, category ranking by Morningstar®and track record. Devenir will periodically review and may recommend changes in the group of mutual funds available. If a particular fund no longer meets Devenirs investment selection criteria, it will be discontinued as an investment option. You will not be given a separate notice of these changes however, changes to the fund line-up will be reflected on the investment website and on the quarterly HSA Investment Options listing.

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    If You’re Even Thinking About Opening An Hsa You Want To Read This

    Health savings accounts are so popular these days, it’s hard to believe they’re not even 20 years old yet. But though they’re pretty common, people’s knowledge of how to squeeze the most out of them often lags a little behind. If you have an HSA or are eligible for one, here are five costly mistakes you don’t want to make.

    Maximize Your Savings By Investing

    Investing HSA dollars has many potential tax benefits and can be an additional way to save for long-term health care expenses and financial goals. Once your HSA reaches a certain designated balance, typically $2,000, you may choose to invest a portion of your HSA dollars.

    You have two smart investment options.

    Option 1: Optum Bank self-directed mutual funds: You can choose from a wide variety of over 30 mutual funds, that average a 4-star Morningstar rating and represent some of the lowest expense ratios in the industry, including life stage funds. The Asset Allocation Calculator can help you decide which funds are right for you.

    Option 2: Betterment digitally managed investments: Betterment helps take the guesswork out of investing your HSA. Based on your HSA investment goals, Betterment will recommend a personalized portfolio of low-cost exchange-traded funds and help keep your HSA investment on track through auto deposits and automated rebalancing. If youâre saving your HSA for retirement, Betterment can also help you manage your investments alongside your other retirement accounts to help you maximize your after-tax retirement income.

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    Pros And Cons Of Investing Your Hsa Funds

    Most people use their HSAs to cover medical expenses. They may use everything they contribute in a year and are happy to get the tax advantage that comes from contributing pretax dollars.

    Others are able to tie up their HSA funds in long-term investments. They cover their current medical expenses with other available funds in the short term knowing they will be able to reimburse themselves eventually from the HSA. Plus they gain the benefits of long-term earnings.

    Depending on which way you need to use the money in your HSA, there can be pros and cons to investing it.

    How An Hsa Works

    How To Invest Hsa Funds In Stocks

    An HSA is a savings account paired with a high-deductible health plan . In 2022, HDHPs have an annual deductible of $1,400 or more for individuals and $2,800 or more for families. The health plan must also have limits on out-of-pocket medical expenses. In 2022, out-of-pocket expenses cannot exceed $7,050 for individual coverage and $14,100 for family coverage.

    To make HSA contributions, you must have a HDHP. Additionally, you cannot have other health coverage or be enrolled in Medicare. You also cannot be claimed as a dependent on someone elses tax return.

    Typically, you cannot use your HSA to pay for premiums. The funds in the account can be used to pay for expenses like your deductible, co-payments, and coinsurance.

    The money in the account accrues tax-free, and you have the option of investing HSA funds to potentially increase your returns.

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    Considering Crypto Be Cautious

    Until very recently, cryptocurrency was the hot new investment that everyone wanted a piece of. But if youve been following the news, you probably already know that crypto has seen something of a fall from gracethanks in part to massive market volatility.

    Even before recent market events, however, crypto had been seeing spectacular gains and stomach-churning losses. Given the uncertainty and high amount of risk involved in crypto, it would probably be best to look somewhere else besides cryptocurrency for places to invest $10,000.

    However, if youre dead set on investing in Bitcoin or Ethereum, make sure its money you can afford to lose. In addition, consider making crypto only a very small part of your overall portfolio, no more than 5%. For more crypto investment ideas, check out our list of the top cryptocurrencies.

    Devenir Guided Portfolio Self

    Offers low-cost, no-load mutual funds, covering a range of asset classes.

    • HSA Guided Portfolio tool to select investment elections and realign your portfolio

    • Auto-Rebalance feature to keep your portfolioallocation in line with your individual needs

    • Quarterly performance review of mutual funds by Devenir, an SEC registered investment advisor

    • Online access to investment account history, balanceinformation, future elections, trades, and much morethrough HSA Banks Member Website

    • Access to Morningstar® pages, fund fact sheets, and prospectuses

    • A quarterly asset based fee may be charged which is calculated on the amount invested and deducted pro rata from the investment account no commission on investment trades

    Note: If you are an existing HSA Bank member, you may have access to a different fund lineup. To view your list of available mutual funds, log into your account and click on “Manage Investments.”

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    Which Hsa Investment Options Should You Choose

    Good question. Theres no need to get fancy when it comes to investing your HSA funds.

    Your provider will give you several HSA investment options to choose from, but we want you to keep it simple. Look for good growth stock mutual funds and spread your HSA investment across four categories: growth, growth and income, aggressive growth and international.

    There are many ways to invest with an HSA, so make sure you talk with an investment pro to choose your HSA investments wisely.

    How To Estimate A Cash Target

    Should I Invest My HSA in Stocks

    How do you feel about paying for your health care expenses today? Are you comfortable writing a check for a $200 office visit or a $75 prescription, but would want to ensure you have immediate access to cash in your HSA if you incur a bill that is, say, $500? The cash target you set will depend on a combination of your expected expenses and your comfort in handling both these billsand those you don’t expect.

    A cash target isn’t a pot of money you collect and then never touch. Instead, you may be using the cash in your HSA to pay for current qualified medical expenses and replenishing it with new contributions.

    Everyone’s target is different. It depends on your expectations for spending on health care, as well as your ability to absorb a large, unexpected medical expense, potentially using other personal savings to cover any gap.

    These steps can help you understand your needs and how to prepare for the unexpected.

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    How To Start Investing Your Hsa

    Build your portfolio

    Building and maintaining an HSA investment portfolio is like building and maintaining a house. A home takes time to construct before you can start living in it. Similarly, it takes time to build your investment portfolio. But like a house, once its built you can start enjoying the benefits of your investment portfolio as you maintain and care for it.

    An important part of investing is understanding your own financial goals and risk tolerance. For instance, a specific fund may average an 8% return over 15 years. But from year to year, the returns will likely have swings, which could have a significant financial impact if your goals are shorter term.

    If youre more risk-averse, you may want to take a more conservative stance with your investment portfolio allocations, which may include fewer high-yielding, yet potentially more volatile asset classes.

    For educational purposes only. HealthEquity does not provide investment advice.

    Be consistent

    On top of your initial investment, setting up automatic recurring contributions to your HSA investment portfolio can increase your growth potential. Moreover, regular maintenance of your investments allows you to effectively react to market changes.

    • Initial HSA invested balance: $3,500
    • Consistent monthly contributions invested: $291.67
    • Annualized rate of return: 7%
    • Number of years invested: 20
    Rebalance regularly
    Be patient

    Investors with long term strategies must apply patience.

    How Do I Move Money From My Hsa Investment Account Back To My Hsa Checking

    If you would like to move money from your HSA Investment account back to your HSA Checking account:

  • Log in to your HSA Investment account at To log in, select “Login” in the upper right corner of the page, then “Investments” and HSA Investment Account Access.
  • Once logged in, click on “Move Money” under the Invest menu.
  • Enter the dollar amount you would like to transfer from your HSA Investment account back to your HSA Checking.
  • Use the “Submit Request” button to complete your request.
  • Your HSA investments will be liquidated on a pro-rata basis based upon your balance by fund to generate the cash to complete the request.
  • Note: Requests resulting in the liquidation of 90% or more of a mutual fund will be processed based upon the number of units calculated using the previous market days net asset value.

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    How To Invest Your Hsa

    Last Updated: 7min. read

    A Health Savings Account is an extremely powerful vehicle for both investing and paying for medical expenses, but a common question is how exactly to invest inside it. Here well explore the the properties, benefits, and investment options of an HSA.

    Disclosure: Some of the links on this page are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality, ad-free content on this site and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. Read more here.

    How A 401 Works

    How To Invest Hsa Funds In Stocks

    A 401 is a retirement savings plan that allows employees to contribute money, often through payroll deductions, to an investment account. Employers can elect to match all or some of employees 401 contributions. You typically have the option to choose from different investment types, often mutual funds, for your 401.

    Traditional and Roth are the two main types of 401 plans, and tax treatment is the primary difference between these two options. With a traditional 401, you will wait to pay taxes until you withdraw money from the account, typically in your retirement years. With a Roth 401, you contribute money after taxes, which means withdrawals in your retirement years will be tax-free.

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