It is true that the mutual fund offerings usually ...

2006-02-09T18:14:00.000-05:00

It is true that the mutual fund offerings usually blow for 401k's and probably the extant HSA's. I am not a mutual fund guy at all and have been so underwhelmed by the choices that my wife is offered that we have opted to put no more money in the mutual funds the last few years. (in fact I have been selling almost all stock holdings. see past blogs.)

That said, money market rates are climbing. It wasn't long ago when I opened my keogh and got over 5% from sitting in cash. Today rates are pushing 4% in many places again.

The reason the 401k (and HSA) mutual fund choices suck is basically worker apathy - even at very high levels of the office. If the workers demanded better options (e.g. owning ETFs or well-run index funds like Vanguard) they would probably be able to get them. Of course this would require some leg-work and persuasion.

Captain Nerd, I feel your pain. My wife works for a very large brokerage firm and is not allowed to own individual stocks in any way shape or form.

Even at 3-4% per year, the tax free compounding afforded by the HSA is too good to pass up.

I've been looking around for a good HSA that would...

2006-02-09T17:42:00.000-05:00

I've been looking around for a good HSA that would let me do what they promised, set up an account that I could manage and pick the investments that I want. All the accounts that I've seen have been at best as "flexible" as some 401(k)'s, where you can choose "High risk", "Moderate Risk" etc., but you can't pick individual stocks or funds. Some accounts don't let you choose at all, all you can do is put your money in their chose fund. What ticks me off most is, I have a brokerage account in which I've bought stocks and funds which are paying me something like 7% a year in dividends which I reinvest. The best fund that the HSAs offer (that I've seen) is around 2% annually. That doesn't even keep up with inflation, much less approach the 5 - 10 % you use in your examples. And those low rates are for accounts that require you to pay annual or even monthly fees, which if you don't have enough money in the account can be more than the interest you earn.

I've been waiting for someone to offer an HSA with the characteristics I've seen touted as advantages, but no one is actually offering anything like that. I can pick my own stocks (apparently) that pay much better than the 1-2% the current HSAs offer, so why can't I just convert my current brokerage account into an HSA?

Like most government ideas, this one sounds really good until it comes time to implement it.

Comments on Marginalizing Morons: Health Savings Accounts – Different Subject, Same ...

It is true that the mutual fund offerings usually ...

I've been looking around for a good HSA that would...