How to Invest Your HSA

It’s worth mentioning that I am a founding member of the HSA Committee for the Plan Sponsor Council of America, which helps educate employers and employees on HSA best practices while also helping to shape policy around these powerful accounts in Washington.

How to Invest Your HSA

Probably the biggest thing to know is that you don’t have to leave your employer or switch plans in order to move some or all of your HSA savings to another provider, specifically one that charges little or no fees for investing.

Your Account is Portable Right Now

Here’s How I Invest: I basically have two HSAs:

I keep my HSA with my employer because I’m continuing to make deposits via payroll, plus my employer makes deposits for me on a quarterly basis as long as I’m enrolled in the eligible plan. 

- You can only do this once a year! - Once the check is cut, I have 60 days to get it into my Fidelity HSA or I will pay taxes and a 20% penalty on the amount of the check.

Very important things to know here:

How to Decide How Much to Invest in Your HSA

This very much depends on your personal situation, but the general way to think of it is the same rule of thumb for any investment: do not invest any funds you would anticipate needing within 5 years or less.

Fidelity does not have a minimum cash requirement, yet I keep my cash there because at least I earn money in their money market versus no interest in my workplace HSA.

How I Decide to Invest My HSA

Finally, I’ll say this – don’t worry too much about what’s going on in the market today because even if you invest all of your accounts at the top of the market and it declines in value, you’ll still be earning dividends on the funds that are invested.

Deciding When to Invest in Your HSA

I’m personally an index investor, so I invest for the market, rather than trying to beat it. I know enough about investing that if I wanted to, I could probably do the research and pick some winners, but I have more important things to do and am just fine with participating in the market as a whole, rather than trying to beat it.