Hey man what is a HSA index fund? How does it differ from a traditional HSA? Also, was curious if I should max out my TSP currently investing 15% per pay period. Company matches up to 5%.
I don’t know what an HSA index fund is. An HSA is a “Health Savings Account”. It’s just a special type of account with some special rules (money goes in tax free, grows tax deferred, withdrawals for qualified medical expenses are tax free).
One of the cool things about an HSA is that you can invest inside of it. So instead of just holding cash in this account, you could BUY an index fund inside of your HSA. Maybe that’s what you’re thinking of?! And yeah, that is something I personally do!
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Yeah so I looked on Fidelity and they have these funds listed:
That is what I was referring to by my post.
Thanks for this information…
Ah, sure enough. It looks like it’s just the name of an index fund. You can see the details here:
https://fundresearch.fidelity.com/mutual-funds/summary/316069319
They’re new… just launched in May of 2020. They appear to me to be just normal “allocation” mutual funds. i.e. they’re made up of about 40% stocks and 60% bonds.
I don’t know exactly why they exist, BUT IF I HAD TO GUESS, I think it’s just a nice allocation/marketing thing for people to put into their HSAs. i.e. mostly bonds, lower risk, lower volatility so the money is there if you need it. So if someone wants to invest inside of their HSA, a Fidelity rep could suggest “Put it into an HSA index fund!”. The same thing could be achieved with their other allocation funds, or with a 2 fund portfolio or something, but I could see this being useful for somebody?
Hi,
I believe when you contribute to your health savings account it sits in cash. If you don’t move the money to the index funds it will just sit in cash for you to use for medical expenses. If you contribute the max for each year and don’t use it all, it would be wise to move it to the index funds rather than leave it in the health savings account in cash. I believe that’s how mine works and I use Optum Bank.
Okay thanks so who do we set up the HSA with my employer or through my healthcare insurance?
Your employer likely has a preferred HSA provider. I would probably check with HR and go with them to make your life more simple. If not, you may be able to open it anywhere and link it to your insurance. I have mine through Fidelity.