I’ve been on an HSA+HDHP for a couple of years now and only realized recently the interest earned from investing HSA money is also tax free, so I want to start investing a part of my savings and see how it goes. I have 2 options, Betterment or Mutual Funds. I figured I’d try the latter to avoid fees, but I’m not sure which funds to choose. My HSA currently provides 30 fund options.

I see people mentioning Vanguard a lot so I spread out my initial investment into 25% chunks across 4 different Vanguard funds. How did I choose them? Well I literally just looked at the performance graphs and selected the ones that historically went up steadily without major dips. As a total noob, how can I improve my choices? Is there a simple way to decide without having to dive deep into the stock market?

  • sugar_in_your_tea@sh.itjust.worksEnglish
    0·
    2 months ago

    Yup, VFIAX (the Vanguard S&P 500 index) is what everyone is saying.

    Here’s what you’re invested in:

    • VFIAX - S&P 500 fund; 500 biggest companies in the US
    • VEIRX - basically a “value” tilt version of the S&P 500, but with far fewer companies (~200 vs 500)
    • VSMGX - conservative, properly diversified fund - 60% in stocks (diversified with international stocks), 40% in bonds
    • VUSXX - basically cash

    So overall, here’s what you’re looking at (back of the napkin math):

    • 35% - cash and bonds
    • 55-60% - US stocks
    • 5-10% - international stocks

    So you’re pretty lightweight on international stocks.

    Personally, here’s what I’d invest in:

    • VITSX - Total US market, meaning there are smaller companies in there as well; 85% of it is the same as the S&P 500, so it’s not that different, but small companies have historically done better than big companies, so it’s good to have some of that exposure
    • VTMGX - pretty much total international market

    To be evenly diversified globally, you’d do something like 60% VITSX and 40% VTMGX, but I personally think the US will outperform, so I do 70% US and 30% international.

    If you’re risk-averse and feel like you’d sell if there’s a market downturn, you can add some bonds (VBTLX) and put something like 10-20% in it (assuming you’re young-ish; if you’re over 50, increase it to 30-40%). But honestly, there’s not much point if you’ll just set it and forget it. If you want something super simple, VASGX looks pretty decent (20% bonds, so a bit less extreme fluctuations in a downturn).

    A lot of people honestly just go 100% S&P 500, because a lot of those companies do business in other countries, so you’re kind of getting international exposure. I personally prefer explicit international exposure though, hence my recommendation.

    • edric@lemm.eeOPEnglish
      0·
      2 months ago

      Thank you so much for the very detailed information! This is honestly the best direct advice I’ve gotten that is understandable for someone like me who knows nothing about it. I will use this info as a starting point and re-allocate my funds accordingly.