Author Topic: Should HSA diversify my portfolio?  (Read 2422 times)

BooksAreNerdy

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Should HSA diversify my portfolio?
« on: July 16, 2014, 01:24:59 PM »
Hello,

First post here.  I'm a long time reader of the blog, but have only recently started exploring the forum.  Lots of good stuff here and I am learning a lot and getting linked to blogs that are teaching me a lot. 

I've generally been able to answer my questions by reading, but this one stumps me. 

I've been reading up on how to take advantage of our HSA.  DH's company contributes $1000 per year and we have always just done $1500 per year to get the balance up enough to cover our deductible.  The money has also been sitting in a 'cash account' for the last few years.  *facepalm*  So, now that I realize that we have a lot of options for investing that money as well, I am not sure what to do.  I will need to request a prospectus to find out what the expense ratios are for the funds, but we have like 37 choices through JP Morgan. 

Our ROTH is at Vanguard and is in the VTSMX fund. 

JPMorgan has the HLEIX, which is very similar.  Should we choose that for the HSA or should we diversify?

***Edited to add***
Does the 2014 contribution limit of $6550 include company contributions?
« Last Edit: July 16, 2014, 01:53:04 PM by BooksAreNerdy »

Numbers Man

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Re: Should HSA diversify my portfolio?
« Reply #1 on: July 16, 2014, 02:07:50 PM »
Does the 2014 contribution limit of $6550 include company contributions? YES!

milesdividendmd

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Re: Should HSA diversify my portfolio?
« Reply #2 on: July 16, 2014, 03:16:46 PM »

Hello,

First post here.  I'm a long time reader of the blog, but have only recently started exploring the forum.  Lots of good stuff here and I am learning a lot and getting linked to blogs that are teaching me a lot. 

I've generally been able to answer my questions by reading, but this one stumps me. 

I've been reading up on how to take advantage of our HSA.  DH's company contributes $1000 per year and we have always just done $1500 per year to get the balance up enough to cover our deductible.  The money has also been sitting in a 'cash account' for the last few years.  *facepalm*  So, now that I realize that we have a lot of options for investing that money as well, I am not sure what to do.  I will need to request a prospectus to find out what the expense ratios are for the funds, but we have like 37 choices through JP Morgan. 

Our ROTH is at Vanguard and is in the VTSMX fund. 

JPMorgan has the HLEIX, which is very similar.  Should we choose that for the HSA or should we diversify?

***Edited to add***
Does the 2014 contribution limit of $6550 include company contributions?

Keep in mind that HSAs are often portable, meaning you can move money from your provider to another one if your options suck.

This was the case with my plan, and I moved the money to HSA bank from my employers plan (health equity.)

I wrote about this manouver here:

http://www.milesdividendmd.com/portable-bliss/

I've been very happy with the free ETF options from TD Ameritrade.

In terms of diversification, you need to decide what you want in terms of asset allocation for your entire portfolio. Whatever your HSA account has should fit into the bigger design of your portfolio.

Have fun.



BooksAreNerdy

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Re: Should HSA diversify my portfolio?
« Reply #3 on: July 16, 2014, 03:50:26 PM »
Thanks for the replies and link! I'll have a look at the expense ratios when DH comes home and we can log in together on his acct. Apparantly, I'm not able to see all of the same options on the web page as he is since I am not the primary on the acct.

Right now, we are pretty confident with a high stock allocation, so it seems fine to go that route for the HSA as well. I'll check out the 401k tonight as well and see where that allocation lands. I do know that the 401k has very low fees- comparable to Vanguard.

***edit***

OK, I did some googling and the vtsmx has an expense of .17% while the hleix has .2%.  Is this a big difference? Are admiral shares available if I were to transfer my HSA and be able to invest in vanguard funds?
« Last Edit: July 16, 2014, 03:56:24 PM by BooksAreNerdy »

milesdividendmd

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Re: Should HSA diversify my portfolio?
« Reply #4 on: July 16, 2014, 04:19:30 PM »
0.17 and 0.2 are not too big of a difference.

If you transfer to HSA bank you will have access to many of vanguards etfs including VTI which tracks VTSMX And has an identical ER of 0.05.