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What funds to pick in an HSA?

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  • Avatar WiscDoc 
    Participant
    Status: Physician
    Posts: 11
    Joined: 07/04/2019

    Our group switched to a High Deductible HSA this year and I have $4500 to invest within it.  I have switched to managing my own finances in the last year and have my 401k and Roth IRA’s split on an 80:20 stock bond ratio.  I recently switched my 401k to Vanguard accounts and also have our Roth IRA’s in Vanguard.  In those accounts I have it all in vanguard total stock, total international stock and total bond funds (About 220K total).  I like the simplicity of a 3 fund portfolio and feel like I am less likely to make mistakes if I keep things simple and not try to tilt to a more elaborate portfolio.

    My issue as a newbie is that the HSA (Health Equity) doesn’t offer any of these 3 funds.   They all, however, are Vanguard index funds.  I realize this is a very small percentage of my portfolio, but I’m a little lost as to how to allocate that portion within the HSA.  I don’t really have a small or value tilt in mind, and we already own some real estate near our home that I consider to be an investment.  From what I’ve read you want your most aggressive funds to be in the HSA because of the tax breaks so I could pick a small value fund I suppose but then wouldn’t I be tilting my portfolio to small funds?  If I wanted to mimic my above 3 fund portfolio should I pick small/medium/large funds and split into thirds?  Maybe I am overthinking this but I would love some advice from you more sophisticated investors.

    I listed the available stock funds below and excluded the bond and real estate funds.  (I’m also getting used to the acronyms so if it is easier for me to just list out the names I can do that also)

     

    VSIAX, VTTSX, VTWNX, VWIAX, VFORX, VTINX, VEMPX, VTAPX, VIIX, VEMIX, VTHRX, VMIAX, VMVAX, VIVFX, VVIAX

     

    Thanks everyone.

    WiscDoc

    #232427 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3500
    Joined: 01/14/2017

    These are the only ones I’d mess with:

    VTTSX – Target 2060
    VWIAX – Wellesley Income
    VEMPX – Extended market
    VEMIX – Emerging Market
    VMVAX – Mid Cap Value
    VVIAX – Value Index

    Specifically, you could do 80% in an international index elsewhere and fill the remainder of the total international with the VEMIX in your HSA. Same with the extended market and large cap elsewhere. Target 2060 might fit your needs too and have the glide path you’re looking for.

    #232449 Reply
    Liked by WiscDoc, Peds
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1799
    Joined: 01/08/2016

    The target date would be simple option if you want to stay balanced.

    I am 100% vtsax since I want to use it decades from now and have the luxury of cash flowing current expenses.

    #232452 Reply
    Liked by WiscDoc, Lordosis
    triad triad 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 272
    Joined: 04/29/2016

    Vanguard Institutional Index Fund Institutional Plus Shares (VIIIX) – this is SP500

    Vanguard Total Bond Market Index Fund Institutional Plus Shares (VBMPX) – this is bnd

    Vanguard Total International Stock Index Fund Institutional Plus Shares (VTPSX) – this is vxus

     

    edit:these are all great choices.  they have lower expense ratios then the admiral funds you use currently.  I might have to looking into swtiching to this HSA…

    #232455 Reply

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