Author Topic: HSA offers Vanguard but not all the favorites -- what would you do?  (Read 3545 times)

Secretly Saving

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Looking for some thoughts from others.  My HSA offers the following Vanguard options:

- VSMAX - small cap index mutual fund
- VIIIX - institutional index + shares (domestic large blend)
- VIGIX - growth index (large and mid-cap)
- VEMPX - extended market +shares index (domestic mid-cap blend)
- VGSNX - REIT index

What would you do?
« Last Edit: June 24, 2016, 11:50:29 AM by Secretly Saving »

GrOW

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Re: HSA offers Vanguard but not the favorites -- what would you do?
« Reply #1 on: June 24, 2016, 11:57:36 AM »
First, happy dance that your HSA offers not just one but multiple low cost mutual funds. Also, you are offered share classes, admiral or institutional, that are the lowest offered by Vanguard.

Second, you have a nice mix here. Something that you can create diversification if this is your only investment vehicle. If you have other investments, consider that in your overall decision.

Here are the fund names in case that helps others with their response.
- VSMAX - small cap index admiral shares
- VIIIX - institutional index institutional shares
- VIGIX - growth index institutional shares
- VEMPX - extended market institutional shares
- VGSNX - reit index institutional shares

I think we will need more information about your personal investing plan to offer advice tailored to your specific need. Can you share your personal plan including risk tolerance, time horizon, other existing investments, etc?

MichaelB

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #2 on: June 24, 2016, 12:29:33 PM »
No international? All those are 100% US.

If you're looking to imitate VTSAX (Vanguard Total Stock Market Fund, which is a big favorite here), do 75% VIIIX and 25% VEMPX and call it a day.

Jack

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #3 on: June 24, 2016, 12:44:02 PM »
Congratulations!

The funds in that list aren't "the favorites" here only because most of us aren't able to buy them. They're actually better (i.e., lower expense ratio) than the commonly-available recommendations!

What HSA do you have? Mine only allows me to buy "Investor" class shares...

If you're looking to imitate VTSAX (Vanguard Total Stock Market Fund, which is a big favorite here), do 75% VIIIX and 25% VEMPX and call it a day.

+1

Note that VTSAX and VEMPX have expense ratios of 0.05%, but VIIIX has an expense ratio of only 0.02%. So, a 75/25 VIIIX/VEMPX mix will have expenses of (0.02% * 75%) + (0.05% * 25%) = 0.0275% -- about half the cost of VTSAX alone.

Secretly Saving

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #4 on: June 24, 2016, 06:26:12 PM »
No international? All those are 100% US.

I've also got access to:

VMIAX - VANGUARD MATERIALS INDEX ADMIRAL
VWIAX - VANGUARD WELLESLEY INCOME ADMIRAL
VTPSX - VANGUARD TOTAL INTL STOCK IDX INSTLPLS
VIPIX - VANGUARD INFLATION-PROTECTED SECS I
VEMIX - VANGUARD EMERGING MKTS STOCK IDX I
VBMPX - VANGUARD TOTAL BOND MARKET IDX INSTLPLS
 

Secretly Saving

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Re: HSA offers Vanguard but not the favorites -- what would you do?
« Reply #5 on: June 24, 2016, 06:36:55 PM »
First, happy dance that your HSA offers not just one but multiple low cost mutual funds. Also, you are offered share classes, admiral or institutional, that are the lowest offered by Vanguard.

Second, you have a nice mix here. Something that you can create diversification if this is your only investment vehicle. If you have other investments, consider that in your overall decision.

I think we will need more information about your personal investing plan to offer advice tailored to your specific need. Can you share your personal plan including risk tolerance, time horizon, other existing investments, etc?

Yes, Happy dance! But I will say that they include a small ongoing monthly fee for investing the money instead of leaving it in cash...

Risk tolerance is high. 

Time horizon is long.  I don't think we'll tap the HSA until after 65 - so in about 30 years.

Existing investments - This one is a long one.  We're kind of all over the map.  I need to consolidate from working at multiple jobs.  Besides the HSA we have 401k, 403b, 457, 529s, Roth IRAs, traditional IRAs, a pension, company stock, rental properties etc.  Some time soon, I'll write a case study.  I'm sure I'm missing something that all of the wonderful MMM forum members will point out! 

Secretly Saving

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #6 on: June 24, 2016, 06:39:09 PM »
Congratulations!

The funds in that list aren't "the favorites" here only because most of us aren't able to buy them. They're actually better (i.e., lower expense ratio) than the commonly-available recommendations!

What HSA do you have? Mine only allows me to buy "Investor" class shares...

If you're looking to imitate VTSAX (Vanguard Total Stock Market Fund, which is a big favorite here), do 75% VIIIX and 25% VEMPX and call it a day.

+1

Note that VTSAX and VEMPX have expense ratios of 0.05%, but VIIIX has an expense ratio of only 0.02%. So, a 75/25 VIIIX/VEMPX mix will have expenses of (0.02% * 75%) + (0.05% * 25%) = 0.0275% -- about half the cost of VTSAX alone.

HSA is through Health Equity.  It's new to us and offered through our employer.
« Last Edit: June 24, 2016, 06:41:12 PM by Secretly Saving »

GrOW

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #7 on: June 24, 2016, 07:28:06 PM »
HSA is through Health Equity.  It's new to us and offered through our employer.

HEQ is growing their HSA tools at a pretty fast rate. Make sure to check out their non-investing tools like medical cost estimators and how they really simplify the explanation of benefits document you receive after any doctor visit.

MichaelB

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #8 on: June 25, 2016, 06:15:56 AM »
What I would do: 20-25% VTPSX (Total International), and allocate the remaining 75%-80% to US. Within the US portion, I would do something like another 70/30 split between VIIIX (Institutional) and VEMPX (Extended Markets). Maybe throw in something like 10% or less bonds, if you want something to stabilize the portfolio a bit.

Indexer

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #9 on: June 25, 2016, 08:18:40 AM »
You have access to ALL that you need. This is probably the best lineup I've seen outside of the very best 401(k) plans. Vanguard institutional plus funds are only in plans where the employer really cares about their employees. These are the types of funds you would see in Google's 401(k) plan. I've NEVER seen it in an HSA. Is this an HSA company everyone can use or just specific to your employer?

Institutional index + shares is one of the lowest cost funds in existence. It is an even lower cost version of the 500 index admiral shares. Add that to the extended market index and you end up with the total stock index. You need about a 75% institutional index and 25% extended market to get the allocations right.

Now add international.

The way I treat my HSA is that I keep a few hundred in cash to cover little things that might come up. I keep enough to cover the max out of pocket for 1 year in VASIX(80% bonds, 20% stocks), and then the rest is a 60/40 split between total stock and total international stock. The logic is that money I might need in the short term should be conservative. Anything I won't need for decades can be more aggressive. I'm also maxing it out every year so even if I took everything out of VASIX I could replenish it within 12 months.

Secretly Saving

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #10 on: June 25, 2016, 04:11:35 PM »
You have access to ALL that you need. This is probably the best lineup I've seen outside of the very best 401(k) plans. Vanguard institutional plus funds are only in plans where the employer really cares about their employees. These are the types of funds you would see in Google's 401(k) plan. I've NEVER seen it in an HSA. Is this an HSA company everyone can use or just specific to your employer?

Institutional index + shares is one of the lowest cost funds in existence. It is an even lower cost version of the 500 index admiral shares. Add that to the extended market index and you end up with the total stock index. You need about a 75% institutional index and 25% extended market to get the allocations right.

Now add international.

The way I treat my HSA is that I keep a few hundred in cash to cover little things that might come up. I keep enough to cover the max out of pocket for 1 year in VASIX(80% bonds, 20% stocks), and then the rest is a 60/40 split between total stock and total international stock. The logic is that money I might need in the short term should be conservative. Anything I won't need for decades can be more aggressive. I'm also maxing it out every year so even if I took everything out of VASIX I could replenish it within 12 months.

Thanks for the reply.  To answer your question, I think it is just specific to the company, but it's just a guess.  AS for cash, we're required to keep $1000 in cash in the HSA, so that just sits there.  We want to invest the rest aggressively and wait indefinitely to access it.   All medical expenses we cover out of a different stash of money in a money market.

FImastaflex

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #11 on: February 07, 2017, 01:36:28 PM »
I registered just to thank you for starting this thread. I have the same HSA from HEQ and the same options. This discussion has helped tremendously; there wasn't another place I could find discussing this specific HSA and these specific funds. :)

Secretly Saving

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Re: HSA offers Vanguard but not all the favorites -- what would you do?
« Reply #12 on: February 08, 2017, 01:19:48 PM »
Great!  I'm glad it could help.  Good luck in your FIRE journey!