Have you been wondering, "What are my HSA investment options?" Well, we've got your answers here.
ETFs, mutual funds, and stocks
HSA funds may be invested in any investment approved for IRAs, which includes bank accounts, annuities, certificates of deposit, stocks, mutual funds, or bonds. On our platform, we support exchange-traded funds (ETF), mutual funds, and stocks for HSA investing.
What are exchange-traded funds (ETF), mutual funds, and stocks? Great question. Let's break them down together.
Exchange-traded funds (ETFs)
ETFs are a basket of stocks designed to track an index or specific sector. They are a flexible investment vehicle that typically provides lower expense ratios than actively managed mutual funds.
Mutual funds
Mutual funds pool multiple investments to create a diversified portfolio of stocks, bonds, or other securities. Managed by professional fund managers, mutual funds allow investors to participate in a broad range of assets without directly managing individual securities.
Stocks
When you purchase a stock, you purchase shares of an individual company. Investing in stocks is a high-risk, high-reward strategy that allows you to target specific companies.
Comparing all three
When evaluating ETFs, mutual funds, and stocks, it's wise to consider the following factors:
Diversification. Buying stock in one company can be great if you have great faith in that company, but it also means putting your eggs in that company’s basket. Mutual funds offer diversification of your investment by pooling funds into investments into multiple securities. ETFs, like an index of the S&P 500, can offer diversification benefits as well, but it’s important to note that some ETFs, like an ETF with a focus on the gold sector, do not.
Liquidity. When can you buy or sell a security? Mutual funds are priced at the end of each trading day, limiting when you can buy and sell them.
Management. Professional fund managers manage mutual funds, which means they likely have a higher expense ratio (more costly), but it might also be reassuring that someone skilled is managing them.
HSA investment list
Here's a link to all of our supported HSA investments—enjoy!