Author Topic: Wells Fargo HSA Fund?  (Read 2547 times)

j3000

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Wells Fargo HSA Fund?
« on: April 17, 2012, 10:57:00 AM »
I recently opened a Wells Fargo HSA and was just wondering if anyone had some advice on good funds to place the money in?

trammatic

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Re: Wells Fargo HSA Fund?
« Reply #1 on: April 17, 2012, 11:14:51 AM »
I'd leave it in something very safe until you build up a cushion.  Part of the benefit of a HSA is not paying taxes on disbursements used for medical expenses.  If you're in the 25% tax bracket, that's a "return" of 25% for just depositing the money and using it for medical expenses. 

I'd typically keep the annual deductible in a liquid place...  So if the plan had a $5000 deductible, I'd keep all contributions up to that $5,000 mark in something like a money market fund, or maybe short-term bonds, if you're really adventureous.  Once you get past that $5000, invest the surplus into more risky assets generally in line with your risk threshold.  Every January 1, make sure you have $5000 liquid and safe.

The larger your surplus over the deductible the more risk you can take with it, so as your money grows, you might reduce that $5000 cushion.  Say typical expenses subject to the deductible run about $1500/year.  If you have 15,000 in the HSA, you might only keep $3000 or $2500 in the money market fund, and be more aggressive with the rest.  The logic behind this is that the larger buffer you have might make you more risk tolerant, since the "worst case" scenario would still leave you solvent.

j3000

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Re: Wells Fargo HSA Fund?
« Reply #2 on: April 17, 2012, 01:23:08 PM »
The liquid deductible makes sense.  I'm not quite there yet (since I just opened it) so I guess I have some time to think about it.

smedleyb

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Re: Wells Fargo HSA Fund?
« Reply #3 on: April 22, 2012, 06:24:50 PM »
I try to liquidate my HSA every year, the entire 6K I put in it.  Dental, medical, whatever the cost (which can be high for a family of 4).  I got an IRA and a brokerage account if I want long term capital gains.  My HSA is always all cash, all the time.