I am treating my HSA as a retirement account. To max it out I contribute about $100 every pay period (roughly every two weeks) pre-tax, plus employer contributions sprinkled in occasionally. Once I got to $2500 I bought one of Fidelity's no-fee mutual funds (FAMRX) since that was the minimum investment. Now I am wondering what to do with the small contributions that come in. Thus far I have been using them to buy more of the same mutual fund, since there does not seem to be any costs associated with doing this. But I am wary that this may be a bad idea for some reason. Should I instead let the contributions sit in cash until I have enough to make a decent-sized investment in something else?


Aside from asking why you chose a fund that has an .80% expense, I see no issue with frequent deposits. If this is actually being treated as a retirement account, you should make sure it fits into your overall asset allocation goals.

  • I have a lot of other money in individual stocks and mutual funds so I was just looking for something basic with no commission. In retrospect I guess I should have gone with an index fund like FUSEX (0.1% expense ratio). Does it make sense to save up my contributions until I have $2500 to buy that instead? I have 30+ years until retirement. – Craig W Feb 16 '13 at 20:22
  • I am near retirement, and when I look at .8% being 20% of the 4% I'd withdraw each year from savings, that number, both as a percent and in calculated dollars, looks high. On the other hand .1%, not too bad. – JTP - Apologise to Monica Feb 16 '13 at 20:26
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    @CraigW VOO is 0.05% expense ratio, half of FUSEX. SPY is 0.09%. You should definitely check around and compare similar funds. – littleadv Feb 16 '13 at 21:02
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    @craigW check around, some allow ETF trading for free. IIRC Vanguard allow 25 free ETF trades on their brokerage, so you can definitely invest in VOO and not pay extra over the expense ratio – littleadv Feb 17 '13 at 2:33
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    If you have a $10 trade, buying $1000 of an ETF will be a 1% hit, obviously, but the low expense makes up for that in the long term. You can start with no cost ETFs, as littleadv suggests, and if you wish to change to an ETF with a commission, do it in large chunks, say $5000 at a time. – JTP - Apologise to Monica Feb 17 '13 at 2:57

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