Investing In HSA Health Savings Accounts

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HSA Health Savings Accounts

HSA health savings accounts are savings and investment accounts designed specifically for saving for and paying for health related expenses. These savings accounts are a smart money saving idea that everyone should at least consider. Owner's of these accounts hold high deductible health insurance plans which trade a deductible for a smaller monthly premium. Because the monthly premium is higher than typical health insurance plans the health savings account gives the saver the ability to save for the premium via a tax advantaged savings account.

Most HSAs also give the saver the ability to invest the idle savings while in the account as a means of growing the investments over time assuming they have the higher education necessary to be a confident investor. If the premium is paid in a given year the saving can roll over year after year indefinitely growing over time based on the return of the investments.

HSA Investment Accounts

The investment portion of HSA accounts are important to understand. Most accounts will let you invest the savings in equities and various similar investment products but usually only after a set threshold of savings has been met. The reasoning is because investments are volatile but the annual premium of your health insurance plan is not. If you need to pay it you need to have liquid savings available which are dependable.

Usually you need to contribute to a HSA account savings plan for some time before you meet investment thresholds. This is a safety feature to keep your dollar value stable in the early years of you health savings. Once you've been saving for some time you build up a solid portfolio value and begin to have the option of investing a portion of your HSA account value. As a way to maintain further stability it's a good idea for many people to start their HSA investing program with safer investments like various bond and money market funds which historically have less volatility.

Health Savings At Risk

Once you have built up a significant account balance much greater than that of your annual deductible, it becomes more and more appropriate to include equities into your investment portfolio. Even in this situation however investing in HSA health savings accounts should still remain fairly conservative as the account value may need to be tapped at any time. One good way to invest in equities while still maintaining significant diversification is to buy stock market funds that cover the global market. This can easily be achieved through low cost index funds and ETFs. There are however many professional financial advisors with substantial financial education who can provide specific guidance in this area as every person has different risk profiles and needs.

Investing in HSA health savings accounts are a smart idea for many people however it's not for everyone. It is inherently risky as the account value may need to be liquidated at any time. If you have a HSA account it may be worth speaking to a professional financial advisor about your situation and options. You may find that investing in these accounts is a good option for but you may find otherwise. Take the time to weigh your options and make the right decision for yourself and your family.