The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: tetlee on October 27, 2016, 11:04:46 AM
-
The numbers here are small but I'm interested what some of you think...
The minimum balance on the cash side of my HSA is $1000.
If I maintain a balance of at least $1500 then I dont pay a $1.5 a month fee.
I guess a growth rate of 7% says I should invest the $500 but I dont like see that fee show up!
What would you do?
-
What's your annual deductible? Mine is $2,600 so I keep that amount liquid and don't lose sleep about what I could gain in the market instead. In the event that I need to pay the full deductible, I'll be happy it's there (and don't need to dip into emergency money).
-
Did you choose this HSA provider, or did it come with your work plan? If you have a choice, I'd choose an HSA provider that doesn't charge these type of fees.
That said, if you don't have a choice, I'd keep the $500 invested and pay the fee.
-
Yeah - I'm in the 'don't pay the fee' camp, $18/500 is 3.6% - which is more than inflation. i'd throw the $500 in there, call it "diversification"
Added bonus - that's 500 pre-tax dollars. You should really be maxing your HSA out every year, as a tax advantaged solution after your 401k and IRA (if applicable)
the bank that hosts my HSA also allows it to be invested once the balance is >$2500 or something like that - so in that case you aren't even 'missing' the market
-
On the assumption that you want to be holding some cash anyway, as part of your overall asset allocation and as a way to smooth out daily transactions, it seems easy to justify leaving the $500 invested to avoid the fee. If it bothers you, and you have other cash accounts, you could invest an extra $500 from one of those accounts to make up for it.
My family has like six different checking and saving accounts, and I'm always pained when I see how much cash we have collectively sitting idle in all of them. A few thou here and there really adds up.
-
My bank (welcome to Canada) has a $14.95 monthly banking fee which is waived with $3500 cash balance in chequing (aka checking). Thats a portion of my emergency fund, because it saves me a lot more than the 1% interest im getting on the rest in "high" interest savings account.