HSA Investment Advice

[wonderfuffin]

Hi all,

This is my first post. I just recently discovered MMM and the exciting world of FI and have been trying to absorb as much of it as I can. I found out my employer will be shutting down in 6 months to a year and am trying to use that time to make significant changes to my finances to set me up better moving forward.

I currently have an HSA with a balance of around $1200. I want to start investing that money as it is currently just sitting in the account. However, I have no idea what funds I should put this into. From what I've read the Vanguard Total Stock Market Index seems to be ideal, but the HSA administrator which holds my plan doesn't offer anything from Vangaurd.

There is a very long list of Mutual Funds available. I won't list the individual funds because the post would be to lengthy, but below are all of the headers:

Invesco Funds
American Funds
Federated Funds
Fidelity Advisor
Franklin Templeton Investment
Scout Funds

Can anyone recommend which specific funds I should invest in and what percentage of the money should go into each?
Also, does it even make sense to invest now knowing I will be leaving my current job in 6 months to a year and seeking employment elsewhere?
Lastly, I will be having a dental procedure that costs $2200 out of pocket in Jan. With this information, is there any negatives of investing the money now when I will need it in January? (aside from the fact the investment could lose money).

Thank you all for the help I'm sure you will provide!

[MVal]

You know, I don't if all HSAs are like this, but I just called the bank that holds mine through my job and they told me I have to have at least $3500 in it to start investing. You might check if yours is the same.

Either way, I would say max that sucker out now!

[Jack]

First of all, what does your investment policy statement say?

Second, we really can't tell a damn thing just from a list of companies. We need fund names and expense ratios (or ticker symbols).

Also, does it even make sense to invest now knowing I will be leaving my current job in 6 months to a year and seeking employment elsewhere?

If you're sure you'll continue to be covered by an HDHP and eligible for an HSA, sure. Otherwise, maybe, maybe not. There are rules about how much you can contribute when you're only eligible for part of a year; read IRS publication 969 to figure it out.

Lastly, I will be having a dental procedure that costs $2200 out of pocket in Jan. With this information, is there any negatives of investing the money now when I will need it in January? (aside from the fact the investment could lose money).

If you plan to pay for the dental procedure using funds from the HSA, then I'd say you might as well leave it in cash. However, that's not why HSAs are so exciting to us around here. Read this and this to learn the strategy of contributing to the HSA then paying health expenses out-of-pocket (in the short term), and how it can help you in the long run.

[wonderfuffin]

Great point MVal! I check and most of the funds have a $1000 minimum for investing, however some are higher.

[neil]

I looked at the options in my HSA, and only one wasn't a total disaster.  (S&P index fund with an absurd but tolerable fee.)

Since I have other investments, I am going all in on that in the HSA and covering the imbalance in other accounts.  The only "risk" here is having an account imbalance, but I really just think of the HSA as a medical expense vehicle in retirement after the taxable account well is dried up.  I don't really care if I carry stock in the HSA specifically.