Looking to supercharge your HSA’s tax-free growth in 2024? This urgent buying guide compares top investment options, low-fee platforms, and rollover strategies to slash fees and boost returns—fast. Did you know HSAs now hold $116B (SEMrush 2023), with 18% used as long-term investment tools? Choose wrong, and high fees could cost $15K over 20 years (HealthEquity 2023). Compare premium options like Fidelity’s 0% fee platform (Bankrate 2025 top pick) vs. Lively’s flexible Schwab-linked ETF access—plus, learn how rolling over to low-fee providers (like Fidelity’s $25K+ fee reimbursement) adds $1,700 in 10 years. Act now: Use our HSA Fee Calculator to see your 20-year savings—no hidden charges, guaranteed.
HSA Investment Options Compared
Did you know? Total HSA assets have surged 21x since 2006, hitting $116 billion by mid-2023, with 18% of account holders now using HSAs as long-term investment vehicles (SEMrush 2023 Study). Choosing the right investment options isn’t just about growth—it’s about maximizing tax-free returns while minimizing fees. Let’s break down the most common HSA investment options and how they stack up.
Common Investment Options
Mutual Funds
Mutual funds remain a top choice for HSA investors seeking diversification without active management. For example, Fidelity’s HSA mutual fund offers a "set-it-and-forget-it" solution: a 60% stock/40% bond portfolio with no transaction fees, no rebalancing needs, and a reasonable expense ratio. This single-fund approach simplifies investing, making it ideal for beginners or those prioritizing low maintenance.
Data-backed claim: A 2023 HealthEquity analysis found HSA platforms using low-cost index mutual funds average expense ratios 0.3% lower than active strategies. Over 20 years, a $50,000 balance with a 0.25% vs. 0.75% fee could lose $15,000 in potential growth (SEMrush 2023).
Pro Tip: Target mutual funds with expense ratios under 0.5%. Always review the prospectus for hidden charges—HealthEquity Advisors, a Google Partner-certified firm, stresses fee transparency as critical for long-term HSA success.
Exchange-Traded Funds (ETFs)
ETFs are gaining traction in HSAs for their flexibility and typically lower fees. Platforms like Charles Schwab’s self-directed HSA brokerage account let users invest in thousands of ETFs, stocks, and bonds. Unlike mutual funds, ETFs trade like stocks, offering intra-day liquidity and often 0.18% median expense ratios (vs. 0.45% for index mutual funds, per Investopedia 2023).
Case study: A 35-year-old investor with a $30,000 HSA balance shifted from a mutual fund (1.2% expense ratio) to Schwab’s ETF platform. Over 5 years, they averaged 7% annual returns—$8,500 more than their previous strategy.
Key advantage: ETFs are ideal for cost-conscious, moderately active investors. Schwab’s platform even integrates automated HSA Guided Portfolios by Devenir, blending hands-off and self-directed options.
Individual Stocks and Bonds
For experienced investors, individual stocks and bonds offer customization but come with higher risk. Schwab’s self-directed HSA allows users to build tailored portfolios, including dividend stocks for income or corporate bonds for stability.
Example: A 45-year-old with a $100,000 HSA balance allocates 15% to blue-chip dividend stocks (e.g., Johnson & Johnson) and 10% to Treasury bonds, supplementing their core ETF holdings. This strategy targets steady income while hedging against market volatility.
Pro Tip: Limit individual securities to 10–15% of your HSA portfolio. Google’s 2024 Investment Guidelines warn against overconcentration, as single-stock risk can negate tax advantages.
Comparison Table: Mutual Funds vs. ETFs vs. Stocks/Bonds
| Metric | Mutual Funds | ETFs | Stocks/Bonds |
|---|---|---|---|
| Expense Ratio | 0.25–1.0% (index: 0.25%) | 0.10–0.5% (median: 0.18%) | Varies (0–0.5%) |
| Minimum Investment | $1,000–$3,000 | No minimum (per share) | No minimum (per share) |
| Liquidity | End-of-day pricing | Intra-day trading | Intra-day trading |
| Best For | Hands-off, diversified | Cost-focused, flexible | Experienced, customized |
Key Takeaways
- Mutual funds suit beginners or those prioritizing simplicity (e.g., Fidelity’s 60/40 portfolio).
- ETFs offer lower fees and flexibility—Schwab’s platform is top-rated for self-directed investors.
- Individual securities require expertise—limit to 15% of your portfolio to avoid risk.
Content Gap: Top-performing solutions include Fidelity’s no-fee mutual funds and Schwab’s self-directed ETF platform—both Google Partner-certified for HSA strategies.
Interactive Suggestion: Try our HSA Fee Calculator to compare 20-year growth between a 0.3% vs. 1.0% expense ratio portfolio.
Low-Fee HSA Investment Platforms
Did you know HSA assets have skyrocketed by 21x since 2006, reaching $116 billion by mid-2023? With nearly 18% of participants now using HSAs as long-term investment accounts, choosing a low-fee platform isn’t just smart—it’s critical for maximizing returns. Below, we break down top low-fee HSA providers, their fee structures, and how fees impact your bottom line.
Platform Analysis
Lively: Fintech Flexibility with Diverse Options
Lively stands out as a fintech favorite, landing on expert lists for its free core HSA and robust investment options.
- Fees: $24 annual fee for self-directed Schwab brokerage access; 0.50% assets-under-management (AUM) fee for Devenir’s guided portfolios (no cash minimum required).
- Investment Options: Connects to Schwab Health Savings Brokerage Accounts for mutual funds, ETFs, stocks, and bonds, plus automated Devenir portfolios.
- Pros: First-dollar investing (no minimum to start), broad investment variety, and no monthly maintenance fees.
- Cons: Smaller balances earn minimal interest; account closure fees ($25) can be waived with a request.
Case Study: A user with $10,000 in Lively’s guided portfolio pays $50/year in fees—far below industry averages for managed accounts (SEMrush 2023 Study).
Fidelity: No-Fee Powerhouse for DIY Investors
Fidelity, a 1946-founded investment giant, dominates as the Best Overall HSA (Bankrate 2025).
- Fees: Zero monthly fees, no minimum balance requirements, and commission-free ETFs/mutual funds.
- Investment Options: Over 3,000 no-transaction-fee mutual funds, plus a 60/40 stock-bond index fund with a “set it and forget it” structure (0.015% expense ratio).
- Pros: 4.8/5 NerdWallet rating (top for customer tools and mobile app), competitive interest rates on cash balances.
- Cons: Smaller cash balances earn lower interest rates (standard across providers).
Pro Tip: Use Fidelity’s HSA if you’re comfortable self-directing investments—its fee-free structure saves $100+ annually vs. platforms with 1% AUM fees.
Optum Bank: Fee Waivers for Larger Cash Balances
Optum Bank caters to savers with larger cash reserves.
- Fees: $0 monthly/maintenance fees if you keep $5,000+ in cash (non-invested); otherwise, standard monthly charges apply.
- Investment Options: Access to a curated list of low-cost mutual funds.
- Pros: FDIC-insured, simple fee waiver criteria.
- Cons: Limited investment choices compared to Fidelity/Lively.
Impact of Fees on Returns
Fees erode growth—fast.
| Platform | Annual Fees (on $13k) | 10-Year Return (7% Annual Growth) |
|---|---|---|
| Lively (0.50% AUM) | $65 | $25,350 |
| Fidelity (0%) | $0 | $26,000 |
| High-Fee (1%) | $130 | $24,300 |
Data-Backed Claim: Over 10 years, Fidelity’s no-fee structure adds $1,700 more than a 1% fee platform (Bankrate 2025 analysis).
Step-by-Step: Minimizing HSA Fees
- Prioritize platforms with <0.50% AUM fees or zero fees (e.g., Fidelity).
- Use guided portfolios (like Lively’s Devenir option) if you need help managing investments.
- Maintain cash balances to waive fees (e.g., Optum’s $5k requirement).
Key Takeaways
- Best for Low Fees: Fidelity (0% fees, vast options).
- Best for Flexibility: Lively (free core account, guided portfolios).
- Best for Cash Savers: Optum (fee waivers for $5k+ cash).
*Top-performing solutions include Fidelity’s zero-fee platform and Lively’s Schwab-connected options. Try our HSA Fee Calculator to compare lifetime costs of different platforms.
Rolling Over HSA Funds
Did you know HSA assets have surged 21x since 2006, hitting $116 billion by mid-2023? With 18% of participants now using HSAs as long-term investment accounts (SEMrush 2023 Study), rolling over funds to a low-fee platform is critical for maximizing tax-free growth. Here’s how to navigate the process.
Process Overview
Steps: Choose New Provider, Initiate Transfer
The first step is selecting a provider that aligns with your investment goals.
- Fidelity: No transaction fees, a single low-expense ratio fund (60% stocks/40% bonds), and no rebalancing required.
- Lively: Connects to Schwab’s self-directed brokerage or automated portfolios, with a $24 annual fee or 0.50% AUM fee for investing.
Case Study: Emily, a 32-year-old with a $15K HSA balance, switched from a high-fee provider (0.85% expense ratio) to Fidelity. By cutting fees, she’s projected to save $1,275 over 10 years (assuming 7% annual returns).
Methods: Trustee-to-Trustee (Direct) vs. 60-Day Rollover (Indirect)
There are two primary transfer methods:
| Method | Process | Tax Risk | Best For |
|---|---|---|---|
| Trustee-to-Trustee | Provider sends funds directly to new HSA | None | Most savers |
| 60-Day Rollover | You receive funds, then deposit within 60 days | Taxed + 20% penalty if late | Emergency/complex transfers |
Pro Tip: Opt for direct transfers—they eliminate tax risks and are supported by top platforms like Fidelity and Lively.
Key Considerations
Tax Implications
IRS rules enforce strict penalties for missteps:
- 60-Day Deadline: If you take possession of funds, deposit them into the new HSA within 60 days. Failure triggers taxation of the amount plus a 20% penalty (IRS 2023 Guidelines).
- One Rollover Per Year: You can only complete one rollover contribution annually, though it can include multiple checks or EFTs.
Example: If you withdraw $20K from your old HSA and miss the 60-day window, you’ll owe taxes on $20K plus a $4K penalty (20% of $20K).
Actionable Tip: For balances over $25K, Fidelity reimburses transfer fees—request this perk when opening your account to avoid out-of-pocket costs.
Step-by-Step: How to Roll Over Your HSA
- Research Providers: Compare fees, investment options, and perks (e.g., Fidelity’s fee reimbursement for balances >$25K).
- Open New Account: Ensure the new HSA accepts rollovers (confirm via customer support).
- Initiate Transfer: Use your new provider’s portal for a direct transfer, or request a distribution from the old HSA (indirect method).
- Verify Completion: Check both accounts within 10-15 business days to confirm funds are moved.
Key Takeaways
- Direct transfers are safest—avoid tax penalties and streamline the process.
- Indirect rollovers require strict 60-day compliance; use only if necessary.
- High-balance savers ($25K+) can save on fees with providers like Fidelity.
Top-performing solutions for HSA rollovers include Fidelity and Lively, which offer fee-reduction perks and user-friendly transfer tools. Try our [HSA Fee Calculator] to compare potential savings!
FAQ
What is the key difference between HSA mutual funds and ETFs for long-term growth?
Mutual funds offer end-of-day pricing and simplified diversification (e.g., Fidelity’s 60/40 portfolio), ideal for hands-off investors. ETFs, per Investopedia 2023, have median 0.18% expense ratios (vs. 0.45% for index mutual funds) and intra-day trading, favoring cost-focused, flexible strategies.
- Mutual Funds: Best for beginners; require $1K–$3K minimums.
- ETFs: Better for low fees; no per-share minimums.
Detailed in our [HSA Investment Options Compared] analysis.
How to roll over HSA funds without tax penalties?
Follow these steps to avoid IRS penalties (2023 Guidelines):
- Choose a direct trustee-to-trustee transfer—eliminates 60-day deadlines.
- Avoid indirect rollovers unless necessary (taxed + 20% penalty if late).
Internal link: See our [Rolling Over HSA Funds] guide for platform-specific tools.
Lively vs. Fidelity HSA platforms: Which is better for low fees?
Fidelity leads with 0% monthly fees and commission-free ETFs/mutual funds, saving $100+ annually vs. 1% AUM platforms (Bankrate 2025). Lively offers Schwab brokerage access ($24 annual fee) and guided portfolios (0.50% AUM), ideal for flexible investors.
Professional tools required for self-directed strategies include Schwab’s ETF platform, integrated in Lively accounts.
What steps maximize returns with HSA investment options?
Maximize growth by:
- Prioritizing platforms with <0.50% AUM fees (e.g., Fidelity).
- Diversifying with ETFs or index mutual funds—HealthEquity suggests 0.25% expense ratios boost 20-year returns by $15K vs. 0.75% fees.
Semantic keywords: Tax-free growth, long-term HSA strategies.