The Habits of a Healthy HSA Investor

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Hygiene is typically a concept centered around physical health, but it can also be applied to your financial health. Financial hygiene is essentially a series of practices that can help preserve and maintain your financial stability and security for the future.

When it comes to investing your HSA, here are five habits you can form that will help put you on the path to success.

1. Start somewhere

Simply getting started can help you change your mindset and prioritize setting money aside for growth. Don’t get discouraged if you think “I should have invested my HSA a long time ago.”

The earlier you start investing your HSA, the longer your money can work on your behalf and have the potential to compound returns. It’s better to start somewhere than to not start at all, even if you don’t have a lot of money in your HSA. Just getting started is the most important step – you can gradually adjust or increase the amount you’re investing over time.

2. Create a plan

The first thing you’ll need to do is write down your goals. Keep in mind the WealthCare Saver investment solution lets you choose from three different account types – managed, self-directed and brokerage – so you can determine how involved you want to be in managing your portfolio.

The key is to set goals and work toward them. As your life changes, you can revisit your investment plan to make sure it’s still aligned with your current situation. In fact, revisiting your plan at least once a year to assess how it’s performing is a good habit to form.

3. Be consistent and continually invest

Figure out how much you can invest each month and be sure to stick to it. Consistently staying on track with your plan helps ensure you keep your long-term financial goals top of mind. If significant events happen in your life, like purchasing a home, having a child, or getting a raise, you can adjust your plan accordingly.

4. Diversify your portfolio

You’re likely familiar with the saying “Don’t put all your eggs in one basket”. This is particularly true when it comes to investing your HSA. Diversifying your portfolio and having a wide variety of funds that invest in different things is important to minimizing risk.

Every person’s asset allocation and risk tolerance will vary. For example, if someone is young and just starting to invest for retirement, they may be willing to take on more risk than someone in their 40’s or 50’s. For this reason, the options in the investment solution available to you have been selected to provide access to a wide range of asset classes.

5. Rebalance regularly

Rebalancing is the process of periodically buying and selling assets in your portfolio to maintain your desired level of risk and asset allocation. Over time, the prices of investments fluctuate, and portfolios naturally deviate from your planned allocation. Portfolio rebalancing allows you to sell assets that have grown beyond the initial intended allocation and purchase others that have underperformed. Maintaining a consistent allocation can help keep you on track to reaching your health savings goals.

There are two general ways to approach rebalancing. You can either rebalance your portfolio at a specific time interval or you can rebalance only when your portfolio becomes clearly unbalanced. If you choose either the Self-Directed or Brokerage account type when investing your HSA, you can manually rebalance whenever you desire (during market hours). If you choose the Managed account type, the advisor tool will automatically rebalance your portfolio for you in accordance with your age, risk profile and time horizon.