How To Invest Using A Health Savings Account
When an individual enrolls in a Health Savings Account or HSA, he or she has a wide variety of options to choose from when it comes to deciding where to put his or her savings. Similar to an IRA, funds deposited into a HSA can be invested into a wide variety of high interest-yielding investments, such as stocks, bonds, CDs, and money market accounts.
Here is some general information about potential investment options for HSA investments.
Check with the Health Savings Account provider
Individuals wishing to enroll in HSA plans need to establish their HSAs with a bank or other HSA provider. HSAs correspond to high deductible health insurance plans, but they are not available through health insurance companies because of federal laws.
All banks and investment brokers have their own guidelines and rules about what types of investments individuals can make through their HSAs. For example, some banks only allow their members to invest in certain families of mutual funds. Therefore, before establishing an HSA with a particular financial institution, participants need to make sure that they are comfortable with any investing parameters and regulations that a financial institution sets forth.
Guaranteed investments
When it comes to investments into high interest yielding sources, there are two basic differences between investment options: guaranteed investments and non-guaranteed investments. A guaranteed investment is one that has growth that investors can rely on. This growth is an established percentage of the entire amount of the investment. For example, a CD is a guaranteed investment because the money that a participant deposits into a CD will grow in a predictable manner for a predetermined length of time.
Other guaranteed investments include any vehicle that provides measureable growth for a predictable amount of time, such as a high-interest savings account type similar to a CD.
Non-guaranteed investments
The majority of high interest-yielding investments will not be guaranteed. These may include stocks, bonds, money market accounts, and mutual funds. In the best scenario, funds that are deposited into a non-guaranteed investment will grow, but the growth is not predictable, as it is generally determined by macroeconomic conditions.
In some cases, such as with a money market account, the investor will earn a high percentage rate on the amount of money that he or she has contributed to the money market. The investor does not have to purchase anything. Therefore, the investor can withdraw money at any time, such as when he or she begins to lose principle.
However, in other cases, the investor will need to purchase a commodity, such as a number of stocks. In such a case, the investor will need to sell the commodity in order to remove his or her money from holding. Sometimes in this type of investment, the investor may lose money before he or she is able to sell the commodity.
Health Savings Account holders do not need to make investments
Whenever someone opens a HSA, it is important for him or her to realize that the funds deposited into the HSA do not need to be invested into a high interest-yielding vehicle. Instead, those funds can merely be retained as cash in the account. When the funds are held as cash, they are also readily accessible for use when the HSA holder wishes to use them to purchase qualifying health care services or products – or even non-qualifying items.
Individuals wishing to open HSAs should speak with a qualified health insurance broker for more information about Health Savings Accounts or to learn more about their options regarding their HS As and corresponding high deductible health insurance plans that suit their needs and lifestyle.
By Wiley Long – President, HSA for America (http://www.health–savings–accounts.com) – Professional advisors offering personal assistance on health insurance plans that qualify for a Health Savings Account.
Article Source Tags: ira funds, deductible health insurance, health insurance companies, stocks bonds, money market accounts, high interest savings, high deductible health insurance, health savings account, Uncategorized, health insurance plans
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