I made a BIG mistake! When I opened my HSA account 15 years ago, I didn’t know that I could invest the money. I let it sit in a low/non interest “savings” account. Several employers later, I have balances at different places: fidelity, optium bank, and now current PNC bank. I’m 44 married. Only 25k in HSA total between all three companies. Thankfully I’ve maxed out on my retirement account with mostly target funds. Could you please advise what type of funds I should invest my HSA account? I hope to work for another 10-15 years before retire. Thank you in advance.
1 Like
In order to contribute to an HSA you must be enrolled in a qualifying high deductible health plan. That would be the first question.
@ratbert2k advice is very sound. You need to simplify your finances and combine into a single account. My employer’s HSA administrator has terrible investment options, but they match funds 1:1 up to the max. So I contribute to the account to get the match and then transfer the funds to another custodian twice per year.
It sounds like you are currently paying your medical expenses out of pocket and plan to use your HSA in retirement. If that is the case than you can consider investing your HSA funds with the same asset allocation as for your overall portfolio. You are comfortable with Target Date funds and I believe that the Fidelity HSA has low expense ratio Target Date funds. If you will be paying your ongoing medical expenses from the HSA, then you can consider keeping 1 years’ worth of likely medical expenses in cash.
@ColdReality do a tax-free custodian-to-custodian transfer of all of the HSAs to Fidelity. Then invest it EXACTLY as you would your retirement, because that’s the best way to think of it and use it… and don’t spend it until you retire, but if you had an emergency of course you could.
Better late than never! Fewer than 5% of people know that they can and should invest their HSA funds. So don’t beat yourself up because you can start investing it now.
If the HSA through your employer offers terrible, high-cost plans, you’re not obligated to invest it through the option that your health insurance company provides. As others have stated, we’d also recommend consolidating and moving your HSA to Fidelity Investments or Lively because of to their low-cost plans. Choose a Target Date Fund to invest the HSA money.
Way to catch the mistake and fix it! 
2 Likes