Which bond fund in HSA?

[sergio]

Hello -

I currently have $9k in my HSA money market ($2k required + one year OOP maximum), and about $22k invested roughly 85/15 stocks/bond.

So I have $7k above the minimum needed (which is $2k) to be able to invest. This $7k earns basically no interest. Every year our deductible and OOP goes up, and it'd be nice if I could get some return, even just 1% real return, to help offset rising deductibles.

I was wondering if one of these bond funds would be a "safe" place to put the $7k:

- BAIRD CORE PLUS BOND FUND (BCOIX)
- BLACKROCK HIGH YIELD BOND PORTFOLIO (BHYCX)
- BAIRD INTERMEDIATE BOND FUND (BIMIX)
- VANGUARD INFLATION PROTECTED SECURITIES FUND (VAIPX)

 

[COcheesehead]

One way to the answer this question is to look at Sharpe ratios. I would google what a Sharpe ratio is, research each of your options and pick the one with the highest ratio.

 

[travelover]

Can you move your HSA to Fidelity?

 

[sergio]

Can you move your HSA to Fidelity?

I cannot do this unless I discontinue using my current HSA.

Plus my current HSA has access to a bunch of closed funds (eg TRowe Price New Horizons) that have made my HSA a blowout performer since I started investing in 2015.

I just wish the money market option didn't suck so much.

 

[Morgan22]

What state are you in? Some states tax gains on HSA's. You could put TIPS in it to avoid that. (CA is one of those states.)

 

[mrfeh]

I was wondering if one of these bond funds would be a "safe" place to put the $7k:

- BAIRD CORE PLUS BOND FUND (BCOIX)
- BLACKROCK HIGH YIELD BOND PORTFOLIO (BHYCX)
- BAIRD INTERMEDIATE BOND FUND (BIMIX)
- VANGUARD INFLATION PROTECTED SECURITIES FUND (VAIPX)

Depends on your definition of "safe". If it means the value cannot decrease, then no, none of them are appropriate.

 

[OldShooter]

One way to the answer this question is to look at Sharpe ratios. I would google what a Sharpe ratio is, research each of your options and pick the one with the highest ratio.

I'll disagree with this. The Sharpe ratio is based on the concept that volatility and risk are the same thing. With respect to Harry Markowitz, they are not the same at least for us non-pension-fund investors. For us, risk is primarily about defaults. Risk is less about interest rate changes except for those who do not hold bonds to maturity or who buy funds with large durations.

 

[sergio]

I did some research on these funds and it's not pretty. Even the core bond fund and the TIPs fund saw a 9% drops in March.

I am going to simply stick with the 0% money market for now and open up a second savings account for health purposes. Every month I'll put $500 into the savings account, and then move $500 of HSA money market into investments.

So basically increase my cash on hand, with at least one year OOP expenses earmarked.