Where is the best place to invest HSA funds?


Editorial team Published on

Fidelity is widely considered the best overall custodian for a Health Savings Account (HSA) because it offers $0 account fees and $0 investment minimums.

Best HSA Providers

  • Fidelity: Best for self-directed investing with zero monthly maintenance fees, zero investment minimums, and access to zero-expense-ratio index funds like FZROX. You can open or manage an account via the Fidelity HSA portal.
  • HealthEquity / Optum / HSA Bank: Often used if mandated by an employer's high-deductible health plan (HDHP), though they may charge monthly administrative fees or require a minimum cash threshold (e.g., $1,000 to $3,000) before you can start investing the remainder.

Best Funds to Choose Inside Your HSA

  • Low-Cost Total Market Index Funds: Look for broad diversification and ultra-low expense ratios, such as Fidelity's FXAIX (S&P 500) or FSKAX (Total Market).
  • Target-Date Retirement Funds: Great for a "set-it-and-forget-it" approach that automatically rebalances and shifts toward conservative assets as you age.

Strategy for Maximizing Your HSA

  • Keep a Cash Buffer: Leave enough cash in the account to cover near-term medical deductibles or expected out-of-pocket costs.
  • The "Shoebox" Strategy: If you can afford it, pay for current medical expenses out of pocket, save your receipts, and let your HSA investments compound tax-free for decades before reimbursing yourself in retirement.
  • Note: If you live in California or New Jersey, state taxes do not recognize the federal pre-tax status of HSAs, meaning capital gains and contributions are treated differently at the state level.