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Fidelity HSA investment options
Old 02-18-2020, 08:43 AM   #1
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Fidelity HSA investment options

I am in the process of opening my account at Fidelity and I'm looking for feedback from others with far more investing knowledge than me. Where should I invest my first HSA contribution, I'm looking for a moderately safe set it and forget it option. I am in California if it makes any difference and the state does not allow the HSA deduction.
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Old 02-18-2020, 09:04 AM   #2
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Are you going to spend the money now, or pay out of after tax funds for medical stuff and let the compounding work it's magic?
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Old 02-18-2020, 09:33 AM   #3
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Our HSA is at Fidelity and invested in FZROX, their version of Vanguard Total Stock, which tracks the US stock market.... but we are not making withdrawals.
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Old 02-18-2020, 10:14 AM   #4
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Are you going to spend the money now, or pay out of after tax funds for medical stuff and let the compounding work it's magic?
Compounding for sure, I will pay any bills from my after tax money.
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Old 02-18-2020, 10:25 AM   #5
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Mine is invested in VTI. It's just part of our overall AA, where most of the equity allocation is VTI. I've never withdrawn from the HSA and am still making contributions. We'll probably start using it for medical spending in 10-15 years. At that point, I'll just sell shares as needed and/or stop reinvesting dividends and accumulate some cash in a MMF within the HSA.

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Our HSA is at Fidelity and invested in FZROX, their version of Vanguard Total Stock, which tracks the US stock market...
I guess I should look at FZROX, same index as VTI with no ER. I generally use ETFs for tax efficiency, and like to keep the overall number of funds to a minimum with consistent tickers across account types.

But for the HSA and IRAs... not sure why I'm still paying 0.03% to Vanguard. It's an ultra-low ER for sure, but still adds up over a long period of time.
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Old 02-18-2020, 10:31 AM   #6
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FWIW, from the inception of FZROX in Sept 2018 to Jan 2020, FZRO total return was 8.53% vs VTI of 8.51% so the performance difference appears to approximate the ER difference.... a whopping $4 for each $10k invested.
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Old 02-18-2020, 11:12 AM   #7
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It does seem a bit trivial, but why not? We have a LOT of $10K increments in VTI across tax-advantaged accounts (HSA, Roth, IRAs). So $4 per year, per $10K, compounded over 20-30 years, is definitely worth the 15 minutes it would take me to move it.

Similar for VXUS to FZILX for international, although we'll probably stick with VXUS for tax efficiency since our international equity allocation is all in taxable.
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Old 02-18-2020, 11:44 AM   #8
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I wasn't opining either way other than to say that the difference is negligible.
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Old 02-18-2020, 04:35 PM   #9
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Also in CA and also have our Fidelity HSAs invested in FZROX. It just seemed easiest and I can basically ignore these two accounts all year.
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Old 02-18-2020, 05:46 PM   #10
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Great minds think alike . I started moving some of my HSA cash into FZROX last year.
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