The health savings account (HSA) is arguably the most underappreciated retirement savings vehicle.
It’s understandable. The primary reason HSAs exist is to give people a tax break on money they plan to spend on qualified health care expenses. Retirement savings are an HSA’s secondary use. But still, a health savings account offers a wild amount of flexibility (use it next month, use it in five years, use it in 20 once you retire) with at worst the same tax advantages as a 401(k) or individual retirement account (IRA), and an extra level of tax savings as long as you eventually use that money to pay health care costs.
That said, whether you plan to use your HSA money next month or decades from now, you might very well be interested on putting your funds to work until it’s time to spend them. And today, I’m going to talk about some of the best ways to do that, no matter your risk appetite.
Read on as I introduce you to some of the best Vanguard funds you can stash in an HSA. Some of these funds are most appropriate for people looking to earn a little money on funds they plan to spend in the short-term, while other funds will better serve people who can put their money to work over a much longer time horizon (and thus can accept a higher level of risk).
Don’t have an HSA? That’s OK. These funds can also make hay with tax-advantaged accounts such as 401(k)s and IRAs.
Editor’s Note: Tabular data included in this article is up-to-date as of March 17, 2026.
Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.
Table of Contents
Can You Invest Through Your HSA?
You certainly can.
A health savings account (HSA) can best be described as part cash account, part investment account. Yes, the primary purpose of an HSA is to spend the money on qualified medical expenses, but the rules allow you to invest some or all of it—and many people (myself included) do.
You’ll often need to meet a minimum balance in your HSA before you can start investing—for instance, some HSA administrators might require you to have at least $2,500 in your cash account before you can invest—but some accounts don’t have this requirement. Your best bet, then, is to remember to inquire about whether your current or prospective provider has a minimum requirement.
How to Invest in Your HSA
How exactly you should invest your HSA funds is largely dependent on the investments your HSA provider offers, and that can vary widely.
I’ll cover our top Vanguard retirement picks for your HSA account momentarily, but you’ll likely have a lot of other options available to you. That’s because some HSAs are self-directed and let you choose from thousands of stocks, bonds, exchange-traded funds (ETFs), and mutual funds. In that case, how you invest is just about the same as how you’d invest in a traditional brokerage account or individual retirement account (IRA).
However, other HSAs might require you to choose from a very limited set of mutual funds or ETFs. Even then, the process is pretty simple—just select which fund or funds you want to purchase with your available funds.
If you have a high-deductible health care plan (HDHP) and are eligible for an HSA, research the different HSA providers and their investment choices to determine which investments are available to you.
What Should You Look for When Evaluating a Retirement Fund?
Here are some of the most critical factors to consider when you start investing your retirement savings in an HSA:
- Costs: Let’s say you had $100 invested in a mutual fund, and the fund took out $5 to pay for annual expenses. That means only $95 of your money has the opportunity to grow and compound over time. So if all else is equal, the lower the cost, the better. However, occasionally, a fund justifies its higher fees. No worries in that department: The best Vanguard retirement funds‘ fees typically sit near or at the bottom of their category.
- Taxes: A taxable account (like a standard brokerage account) is better suited to take advantage of certain tax-advantaged investments, such as municipal bonds. For tax-advantaged accounts, such as HSAs, some of the best investments include bond funds (where the interest income won’t be taxed) and actively managed stock funds (where the capital gains distributions from heavy trading, aka “turnover,” won’t be taxed).
- Diversification: You’ve likely always been told that you should hold a diversified portfolio, which means that you hold a variety of investments, not just one or two. That could mean holding multiple assets (stocks, bonds, commodities), but that could also mean holding, say, stocks from different countries, or stocks from different sectors. And investment funds, which can own any number of stocks, bonds, or other holdings all at once, can help you achieve that diversification. But every fund has its own level of built-in diversification. Some funds hold dozens of stocks while others hold thousands. Some funds invest heavily in their biggest stocks while others spread their assets out more evenly. So always consider how diversified a fund really is, as well as whether that level of diversification suits your needs.
- Income: You probably want your retirement portfolio to produce regular income—in the form of both bond interest and dividend income. Stock prices can suffer during nasty corrections and bear markets, but income-generating funds can help provide for your living expenses without forcing you to sell at an inopportune time.
Fortunately, Vanguard’s retirement-focused funds provide just about any investor with the tools to address these and other vital planning considerations.
Why Buy Vanguard Funds?
Vanguard Group is a massive firm that, as it points out itself, “is owned by its funds, which in turn are owned by Vanguard’s fund shareholders.” Its sheer scale—at roughly $12 trillion in global assets currently—and alignment with shareholders’ interests allow it to charge a laughably low 0.07% expense ratio (a mere 70¢ for every $1,000 invested) on average across its 400-plus mutual funds and ETFs.
The average asset-weighted expense ratio for U.S. mutual funds and ETFs is more than six times that, at 0.44%.
So even when a Vanguard fund isn’t the absolute cheapest in its category, it’s still going to be one of your most cost-efficient options.
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The Best Vanguard Funds for HSA Investors in 2026
I want to look at some of the best Vanguard funds to hold in an HSA, and I’m going to do so with an eye on serving a variety of risk tolerances and goals.
To do so, I started by dividing my list into two categories based on investor needs:
1. People who just want to earn a little money on their health savings. These people plan on using their HSA for health-related expenses, but would like to make at least a little money while those funds are just sitting around.
2. People treating their HSA as a second IRA. They’re looking for some long-term growth, and they’re willing to accept some—not a lot, but some—risk.
From there, I chose seven funds that cover a wide spectrum of risk, as represented by their Morningstar Portfolio Risk Score for the trailing 10-year period. Here are the risk levels each score range represents:
- 0-23: Conservative
- 24-47: Moderate
- 48-78: Aggressive
- 79-99: Very aggressive
- 100+: Extreme
These scores are a general gauge of risk compared to all other investments. For example, a bond fund with a score of 20 might be considered a conservative strategy overall, but it could simultaneously be riskier than a number of other bond funds.
The Vanguard retirement funds I’ll discuss are listed in reverse order of their risk score (from most conservative to most aggressive).
One last note: Each fund has a required minimum initial investment of $3,000 unless otherwise indicated. So if you want to invest in these funds via an HSA, you’ll need to be able to purchase at least $3,000 worth of shares up front (once invested, you can buy as little or as much as your HSA provider allows on subsequent purchases). That said, Vanguard offers many of its mutual funds in ETF form, and you can buy those for the much more affordable price of one share; I’ve listed the ETF shares wherever applicable.
Related: How to Max Out Your 401(k) + Other Retirement Accounts
Earn Money on Health Savings Fund #1: Vanguard Federal Money Market Fund
- Style: Money market
- Management: Active
- Assets under management: $374.2 billion*
- SEC yield: 3.6%**
- Expense ratio: 0.11%, or $1.10 per year for every $1,000 invested
- Morningstar Portfolio Risk Score: N/A
At the moment, it seems unlikely that interest rates will go higher, but it’s possible—and if that happens, longer-dated bonds would likely experience capital losses. That was certainly the case in 2022, when very long-term bonds actually saw greater declines than common stock indexes like the S&P 500.
If you are looking for a competitive yield with essentially no interest-rate risk at all, the Vanguard Federal Money Market Fund (VMFXX) is a solid option and one of the very best Vanguard retirement funds at today’s prices. This income fund consists entirely of U.S. Treasury bills and other U.S. government obligations and repurchase agreements.
Money market funds are somewhat unique among mutual funds in that they specifically target a net asset value of $1 per share. Any earnings that cause the net asset value to go higher than $1 get distributed as dividends. This means that, unless you reinvest your dividends, the value of your money market mutual fund will not grow over time. This makes VMFXX an extremely conservative option with extremely limited possibility of loss. In fact, while VMFXX doesn’t have a listed Morningstar Portfolio Risk Score, it’s nonetheless one of the most conservative Vanguard funds you can own.
Related: Best Vanguard Retirement Funds for a 401(k) Plan
That said, money market funds’ yields are very sensitive to Federal Reserve policy moves. As recently as 2022, money market funds in general offered virtually nothing in yield. The Fed’s most aggressive string of rate hikes in history changed that—so much so that even after a few more recent rate cuts, VMFXX remains a legitimate income fund with a yield well north of 3%. Still, Vanguard Federal Money Market’s yield started to decline alongside the Federal Reserve’s reductions in their target benchmark interest rate during 2024, then 2025. So if you require a certain level of income, you might want to keep close eye on both the Fed and the fund and be aware of other options should the central bank’s easing continue.
Until then, the Vanguard Federal Money Market Fund remains one of the very best Vanguard retirement funds for its low risk and competitive yield. You’ll just want to hold it in an HSA or another tax-advantaged account. That’s because money market funds are effectively bond funds, with interest income the predominant source of returns. Interest income is taxed as ordinary income—if you’re in the 37% federal tax bracket, then you’re losing 37% of your bond interest to taxes—making bond funds (and money market funds) extremely tax-inefficient.
* Many Vanguard funds have multiple share classes, including ETFs. Listed net assets for Vanguard funds in this story refer to assets under management across all of a given fund’s share classes.
** SEC yield for money market funds reflects the interest earned across the most recent 7-day period.
Related: The 10 Best Dividend ETFs [Get Income + Diversify]
Earn Money on Health Savings Fund #2: Vanguard Total Bond Market Index Fund Admiral Shares
- Style: Intermediate-term core bond
- Management: Index
- Assets under management: $395.3 billion
- SEC yield: 4.2%
- Expense ratio: 0.04%, or 40¢ per year for every $1,000 invested
- Morningstar Portfolio Risk Score: 16 (Conservative)
While bond funds play an important role in lowering volatility and providing regular income, they don’t need to be as conservative as a money market fund like VMFXX.
Take, for instance, the Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX), which holds longer-dated bonds but remains one of the very best Vanguard retirement funds because of its high-quality portfolio, competitive yield, and rock-bottom fees and expenses.
VBTLX holds nearly 11,500 debt issues, providing extremely broad exposure to the investment-grade bond universe. A little less than half of its portfolio is made up of Treasury or agency debt backed by the U.S. government, 25% is corporate debt, another 20% is invested in government mortgage-backed securities (MBSes), and the rest is spread across foreign bonds, CMBSes, and other debt. The average maturity of VBTLX’s holdings is roughly 8 years, compared to just 38 days for the aforementioned Vanguard Federal Money Market Fund.
Understandably, then, Vanguard Total Bond Market Index is considered riskier than VMFXX.
Related: 11 Best Vanguard Funds for the Everyday Investor
Let’s consider duration, which is a measure of interest-rate sensitivity. As an example, a bond with a duration of two years would see its price rise by 2% if interest rates fell by 1 percentage point, or conversely, would see its price fall by 2% if interest rates rose by 1 percentage point. (The actual calculation of duration is fairly complex; it’s the weighted average of the bond’s cash flows. But the key takeaway is that, all else equal, the longer a bond’s time to maturity, the higher its duration—and thus the higher the interest-rate risk.)
VBTLX’s duration is 5.8 years, implying that a percentage-point increase in rates would theoretically result in a short-term drop of about 5.8% in the fund’s shares. Vanguard doesn’t even list duration for VMFXX because it’s negligible.
The good news? Vanguard Total Bond Market Index’s higher duration means you also have a lot more potential upside should rates head lower. You’re also rewarded with a better yield that’s north of 4%. The razor-thin expense ratio means less of that income is eaten by fees, too.
VBTLX is also available as an ETF: the Vanguard Total Bond Market ETF (BND, 0.03% expense ratio), which currently trades around $75 per share.
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Earn Money on Health Savings Fund #3: Vanguard Wellesley Income Fund Investor Shares
- Style: Moderately conservative allocation
- Management: Active
- Assets under management: $49.4 billion
- SEC yield: 3.5%*
- Expense ratio: 0.22%, or $2.20 per year for every $1,000 invested
- Morningstar Portfolio Risk Score: 29 (Moderate)
If you want both stocks and bonds in your portfolio, you have three choices: 1.) buy individual stocks and/or bonds, 2.) buy stock funds and bond funds, or 3.) buy an “allocation” fund.
I affectionately refer to allocation (also “balanced”) funds as “portfolios in a can.” That’s because, if you so desired, you could literally invest in that single fund and have an entire portfolio of stocks and bonds. That’s not to say investors necessarily should do this, but they certainly can.
Related: 9 Best Fidelity Index Funds to Buy
Still, if you find one of these funds that has an excellent track record and savvy management, they can be useful for allocating certain portions of your nest egg—like, say, the money in your HSA.
Enter Vanguard Wellesley Income Fund Investor Shares (VWINX), a “moderately conservative” allocation fund that’s much more defensively positioned. Here, bonds make up more than 60% of the portfolio. VWINX holds about 1,350 debt issues—primarily corporate debt, but also Treasury and agency bonds, and even sprinklings of foreign bonds and MBSes. The remaining equity portion is spread across roughly 75 stocks or so, with a distinct value tilt and with a little exposure to developed international markets.
And per that track record and well-regarded management? Well, VWINX has both.
Related: The 10 Best Vanguard Index Funds You Can Buy
“The fund’s long-term performance has been buoyed by its durability in market downturns. For example, during 2022’s double stock and bond market declines, the fund dropped 9% compared with 13% for the average peer, with the benchmark falling by 4.8 percentage points more,” says analyst Stephen Margaria in explaining Morningstar’s Gold Medalist rating on VWINX. “Vanguard Wellesley Income’s experienced managers [Matthew Hand and Loren Moran] wield a proven process rooted in fundamental research. Paired with low fees, this fund is an excellent choice for investors seeking an income-focused allocation fund.”
From a tax perspective, Wellesley generates a lot of interest income (taxed at ordinary income rates) and has a high turnover of 63%, which means that, on average, 63% of the portfolio changes every year. That means it can make significant capital-gains distributions, some of which may be short-term in nature and thus also taxed at higher ordinary income rates.
Translation: VWINX is best held in a tax-advantaged account, and HSAs very much fit the bill.
* SEC yield is used instead of dividend yield here because of the fund’s bond-heavy allocation.
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HSA-as-an-IRA Fund #1: Vanguard Global Minimum Volatility Fund Investor Shares
- Style: Global large-cap stock
- Management: Index
- Assets under management: $2.1 billion
- Dividend yield: 2.2%
- Expense ratio: 0.21%, or $2.10 per year for every $1,000 invested
- Morningstar Portfolio Risk Score: 49 (Aggressive)
Vanguard Global Minimum Volatility Fund Investor Shares (VMVFX) checks off a lot of boxes. It invests in U.S. stocks. It invests in international stocks. It provides an above-average level of yield. And it’s designed to reduce volatility.
If you want to diversify your portfolio to also hold non-U.S. stocks, you’ll need a quick terminology lesson. An “international” fund invests only in companies outside the U.S., while a “global” fund invests in both U.S. and international companies. VMVFX is the latter.
Related: Best Target-Date Funds: Fidelity vs. Schwab vs. T. Rowe vs. Vanguard
Like many global funds, Vanguard Global Minimum Volatility dedicates the largest chunk of its assets to the U.S., which sits around 55% of the portfolio right now. The rest of its assets are spread across about 25 other countries, including the U.K. (6%), Canada (5%), Taiwan (4%), South Korea (4%), and France (4%). This 225-stock portfolio is chock-full of dividend-paying large caps that deliver a fund yield of 2.2%—not massive, but still twice as much as you’re getting out of America’s blue-chip S&P 500 Index.
Manager Scott Rodemer has built this portfolio to deliver less volatility than your average global equity fund. He uses a rules-based strategy that’s similar to what an index would provide, but he’s not forced to rebalance the portfolio on a set schedule, and he also uses forward contracts to hedge against currency risk.
Related: What Is SPLV? A Quick Guide to the Invesco S&P 500 Low Volatility ETF
Low- and minimum-volatility funds are generally a trade-off: You sacrifice some upside potential in bull markets to get portfolio protection when markets decline. “You really get what they’re selling,” Daniel Sotiroff, Senior Analyst for ETF and Passive Strategies at Morningstar, said in an interview with Young and the Invested. “When the market just keeps going higher and higher, they don’t look all that great, but they consistently show up during drawdowns; they definitely provide the cushion.”
A couple other things to note? For one, Vanguard Global Minimum Volatility tends to waver between “Moderate” and “Aggressive” on Morningstar’s risk scale. So when its score reads as “Moderate,” assume that’s on the aggressive side of being moderate, and when its score reads as “Aggressive,” take that as a very moderate level of aggressive. Also, VMVFX has a fair bit of turnover, at 43%, so it’s turning over roughly a third of its portfolio every year. As a result, the fund can and does make capital gains distributions, making this a fine fit for a tax-advantaged account such as an HSA.
Related: The 7 Best T. Rowe Price Funds for 2026
HSA-as-an-IRA Fund #2: Vanguard Dividend Growth Investor Shares
- Style: U.S. dividend-growth stock
- Management: Active
- Assets under management: $40.0 billion
- Dividend yield: 1.5%
- Expense ratio: 0.22%, or $2.20 per year for every $1,000 invested
- Morningstar Portfolio Risk Score: 64 (Aggressive)
Vanguard Dividend Growth Investor Shares (VDIGX) is an excellent Vanguard fund for virtually any account—just understand what you’re buying before you purchase.
Vanguard says the actively managed VDIGX “focuses on high-quality companies that have both the ability and the commitment to grow their dividends over time.” In other words, the fund might not have a great yield now, but owners of this fund should enjoy a higher “yield on cost” (the yield you’re actually earning based on the price you bought the stock) as the years roll on. Also, dividend-growth stocks tend to be high-quality companies; only firms with strong financials and excellent cash flows can afford to keep paying shareholders more every year.
Related: 9 Best Fidelity ETFs for 2026 [Invest Tactically]
Said differently: Dividend growth acts like a quality screen that ensures you’re owning a higher grade of stock.
Portfolio Manager Peter Fisher has a tight holding set of roughly 45 predominantly mega-cap equities with bulletproof balance sheets. All of them have raised their payouts for at least a few years, but some have long histories of uninterrupted dividend growth. There are several Dividend Aristocrats (companies that have raised their dividends annually for at least 25 consecutive years), and a few holdings, including Procter & Gamble (PG) and Colgate-Palmolive (CL), are Dividend Kings, which have improved their payouts for at least 50 years or more.
It’s worth noting that Fisher has only had sole control over the fund since Jan. 1, 2024. That’s when longtime manager Donald Kilbride stepped down, leaving the reins of VDIGX to his comanager. But Kilbride will continue to provide ideas for the portfolio.
Related: The 11 Best Fidelity Funds You Can Own
“The strategy rests on the core tenet that compounding capital via companies that grow their dividends will produce strong long-term returns,” Morningstar Senior Analyst Todd Trubey says about the fund’s Gold Medalist rating. “Fisher, like Kilbride, holds that growing cash dividends also serves as the most dependable measurement of continuous sound operation. They prefer to buy firms at reasonable prices, so they often add companies with temporary troubles.”
The tax situation here doesn’t look as dire as most of the other funds on this list, at least at first blush. VDIGX’s turnover is low—just above 15% currently. However, the fund has nonetheless made some rather large capital-gains distributions over the past few years, so it’s not as tax-efficient as it might seem. Thus, this Vanguard fund is likely best held in an HSA or another tax-advantaged account.
Related: The Best Dividend Stocks: 10 Pro-Grade Income Picks for 2026
HSA-as-an-IRA Fund #3: Vanguard 500 Index Fund Admiral Share
- Style: U.S. large-cap stock
- Management: Index
- Assets under management: $1.5 trillion
- Dividend yield: 1.1%
- Expense ratio: 0.04%, or 40¢ per year for every $1,000 invested
- Morningstar Portfolio Risk Score: 74 (Aggressive)
If we’re talking about tax consequences alone, a taxable account is much better positioned to take advantage of an index fund’s tax efficiency than a tax-advantaged account. Still, if you’re looking to use your health savings account as a second IRA, and if performance is your ultimate goal, an S&P 500 index fund absolutely belongs in any HSA.
Related: Qualified Purchaser vs Accredited Investor: What to Know
Why? Well, the S&P 500 is hard to beat. According to S&P Dow Jones Indices data from year-end 2025, only about 14% of actively managed large-cap funds** managed to beat the S&P 500 over the trailing 10-year period, and that number trickles down to just 10% when looking at the trailing 15-year period.
“I know guys that rate active managers in all these categories,” Sotiroff says, “and even they’re like, ‘I’m not buying actively managed large blend [relatively even exposure to value and growth stocks]; I’m just indexing.’ Because it’s so brutally tough to beat a dirt-cheap index fund in the large blend category.”
If you’re thinking of going the same route, consider the Vanguard 500 Index Fund Admiral Shares (VFIAX).
Vanguard 500 Index holds shares of 500 large U.S. companies. But it doesn’t hold them equally. The S&P 500 is “market-cap weighted,” which means the larger the company, the more weight the stock has in the index (and thus the more impact it has on returns). Thus, right now, VFIAX dedicates the largest portions of its assets to companies such as Nvidia (NVDA), Apple (AAPL) and Google parent Alphabet (GOOGL), whose market caps are measured in trillions of dollars.
Related: 12 Best Investment Opportunities for Accredited Investors
Turnover tends to be low, as only a handful of stocks enter or leave the index in any given year. So it typically makes little to no capital gains distributions. This makes VFIAX an extremely tax-efficient option for taxable accounts. Again, if you’re treating your HSA like a second IRA, and your goal is simply to maximize performance, VFIAX makes a lot of sense in your health savings account. Though it is worth noting that VFIAX’s ETF share class, the Vanguard S&P 500 ETF (VOO, 0.03% expense ratio), has no investment minimum. It trades around $615 per share.
VFIAX is Vanguard’s oldest index strategy, and it remains one of the very best Vanguard retirement funds—for HSAs or wherever else you can stash it.
Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.
HSA-as-an-IRA Fund #4: Vanguard Explorer Fund Investor Shares
- Style: U.S. small-cap growth stock
- Management: Active
- Assets under management: $20.9 billion
- Dividend yield: 0.4%
- Expense ratio: 0.39%, or $3.90 per year for every $1,000 invested
- Morningstar Portfolio Risk Score: 86 (Very aggressive)
Vanguard Explorer Fund Investor Shares (VEXPX) is an actively managed mutual fund that invests in predominantly American small- and midsized growth stocks.
Explorer’s 735-stock portfolio has an average market cap of $7.7 billion, which is well within the traditional mid-cap range of $2 billion to $10 billion. (But different systems view cap in their own way. For instance, in Morningstar’s system, small-caps effectively make up the smallest 10% of capitalization within a fund’s “style,” mid-caps make up the next 20%, and large caps are the highest 70%. Within that system, VEXPX is a 30/70 blend of mid- and small caps. Moving on …)
Holdings right now include the likes of optical materials specialist Coherent (COHR) and insurance software company Guidewire Software (GWRE), and HVAC firm Comfort Systems (FIX).
Related: 16 Best Income-Generating Assets [Invest in Cash Flow]
While larger companies also have the potential for outsized growth, smaller companies, as a group, tend to be more explosive—for better or worse. They benefit from investing’s rule of large numbers (effectively, doubling your revenues from $1 million to $2 million is a lot easier than doing so from $1 billion to $2 billion). And when institutional investors become interested in these stocks, large influxes of new investment money can send their stocks skyward.
But they’re riskier. Smaller firms have fewer and narrow revenue streams, meaning if a core product line struggles, it can more easily lead to stock turbulence and losses. They also have less access to capital than larger companies, so if times get tight, it’s harder for them to survive.
Funds like VEXPX help defray that risk by allowing you to buy many smaller companies at once, so one stock’s failure doesn’t torpedo your portfolio’s worth. That risk is further reduced by Explorer’s management style—holdings are selected by five different investment advisors that manage independent subportfolios, allowing them to use their specialities to generate outsized returns while preventing any one manager’s strategy from upending the entire fund’s performance.
Turnover is elevated, too, at more than 50%, and capital-gains distributions can be quite large. But you can snuff out that liability by holding VEXPX in an HSA or other tax-advantaged account.
Related: The 7 Best Vanguard Index Funds for Beginners
How Does Your Portfolio Look? Ask Empower
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Wondering how your portfolio is shaping up? Sign up with Empower to use its free Investment Checkup tool, which can help you assess your portfolio risk, analyze past performance, and get a target allocation for your portfolio. You can even compare your portfolio to both the S&P 500 and Empower’s “Smart Weighting” Recommendation.
And if you want a fuller advisory experience? Empower’s full-service Wealth Management account pairs the firm’s tools with skilled human management. Empower will create a recommended portfolio spanning six asset classes, then help you implement your plans by giving you access to financial advisors who can guide you through retirement planning, college savings, workplace stock options, and more.
Regardless of how much money you bring to the table, if you sign up, you will be given the option to schedule an initial 30-minute financial consultation with an Empower advisor.
Related: 7 Best Gold ETFs You Can Buy
Is It Smart to Invest Your Health Savings Account Funds?
Yes, it can be a good idea to invest the funds in your health savings account—after all, investing is generally the best way to grow wealth over time. But you should also keep at least a portion of your HSA balance saved as cash so you can still easily spend it if you need it.
For instance, I typically keep my estimated annual out-of-pocket expenses in the savings portion of my HSA and invest the remaining balance for long-term needs, such as medical expenses in retirement. This gives me added peace of mind that the money is available if we can’t afford to cover unexpected health care costs with our normal checking account.
Related: How to Get Free Stocks for Signing Up: 9 Apps w/Free Shares
3 Benefits of Investing in an HSA
Some people just aren’t in a financial position where they can invest their HSA funds. But if you are, there are oh-so-many reasons to put at least some of that HSA money to work.
1. Triple Tax Advantage
HSAs offer an impressive trifecta of potential tax benefits:
- Pre-tax contributions: Contributions to an HSA made via payroll deduction are pre-tax. Any contributions you make on your own (not via payroll deduction) may be 100% tax-deductible.
- Tax-free investment growth: Your HSA investment earnings and interest earned on the savings portion aren’t subject to taxes either.
- Tax-free withdrawals for qualified medical expenses: If you withdraw HSA dollars for a qualified medical expense, you won’t be taxed on the withdrawal.
You will pay income taxes and a 20% penalty on withdrawals for non-qualified costs before age 65. However, after age 65, while you’ll still have to pay ordinary income tax on non-qualified withdrawals, you’ll no longer have to pay any penalties.
2. Long-Term Growth
Chances are your health care expenses will probably rise as you age. If you have a high-deductible health plan and start investing in an HSA early, you can build a sizable nest egg for medical costs (or other expenses) in retirement. This will provide some assurance that your future health care costs will be covered even if they grow more expensive when you’re older.
3. Investment Options
Similar to what you’d see with a taxable brokerage account, HSAs sometimes offer numerous investment options, including individual stocks, bonds, certificates of deposit (CDs), funds, and more.
For instance, with a self-directed HSA, investors can allocate a portion of their investments to equities, fixed-income assets, exchange-traded funds (ETFs), and mutual funds. Unlike many other HSA administrators, Fidelity also supports fractional share investing, which makes higher-priced shares more accessible for investors working with smaller dollar amounts.
Do I Qualify for a Health Savings Account (HSA)?
To be eligible for a health savings account, you’ll need to be enrolled in a qualifying high-deductible health plan (HDHP). If you enroll in a high-deductible health plan through your employer, you can open an HSA account through your employer if they also offer that, but if not, you can sign up for your own personal HSA account.
For 2026, deductibles with an HDHP are at least $1,700 for self-only coverage or $3,400 for family coverage (up from $1,650 or $3,300, respectively, in 2025), which can be a hefty sum to pay out of pocket. But pre-tax money saved in your HSA can be used to offset those costs and other qualified medical expenses.
Also note that in 2026, the HSA contribution limit is $4,400 for individuals and $8,750 for families (up from $4,300 and $8,550, respectively, in 2025). And HSAs do have catch-up contributions for those 55 and older: In 2026, that’s an extra $1,000, bringing the limits to $5,400 and $9,750, respectively ($5,300 and $9,550 in 2025).
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What Is the Minimum Investment Amount on Vanguard Mutual Funds?
Vanguard funds are known for being shareholder-friendly. The Vanguard mutual fund company blazed new trails with the index fund, and Vanguard has done more than any other investment firm to keep costs to a minimum for investors.
But there is one hitch. Many of Vanguard’s cheapest funds in terms of fees have initial investment minimums of around $3,000.
If that is a problem for you, don’t sweat it. Most popular Vanguard index funds are also available as ETFs. Most self-directed HSAs will allow you to buy as little as one share, and some even allow for fractional shares. And if you use a commission-free brokerage, you can buy those ETFs without incurring additional fees. ETF prices vary, of course, but many cost less than $100, and they rarely exceed $400 per share.
Related: The 16 Best ETFs to Buy in 2026
Why Does a Fund’s Expense Ratio Matter So Much?
Every dollar you pay in expenses is a dollar that comes directly out of your returns. So, it is absolutely in your best interests to keep your expense ratios to an absolute minimum.
The expense ratio is the percentage of your investment lost each year to management fees, trading expenses and other fund expenses. Because index funds are passively managed and don’t have large staffs of portfolio managers and analysts to pay, they tend to have some of the lowest expense ratios of all mutual funds.
This matters because every dollar not lost to expenses is a dollar that is available to grow and compound. And over an investing lifetime, even a half a percent can have a huge impact. If you invest just $1,000 in a fund generating 5% per year after fees, over a 30-year horizon, it will grow to $4,116. However, if you invested $1,000 in the same fund, but it had an additional 50 basis points in fees (so it only generated 4.5% per year in returns), it would grow to only $3,584 over the same period.
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Related: The 10 Best Dividend ETFs [Get Income + Diversify]
We love exchange-traded funds (ETFs) because they can provide one-click access to hundreds, even thousands of stocks, while charging often minuscule fees.
One way to put that low-cost diversification to work? Collecting dividends. But trying to choose from literally hundreds of income-producing funds could take up a lot more time than you have. So let us help you narrow the field—check out our list of ten top dividend ETFs.
Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income
The vast majority of American dividend stocks pay regular, reliable payouts—and they do so at a more frequent clip (quarterly) than dividend stocks in most other countries (typically every six months or year).
Still, if you’ve ever thought to yourself, “it’d sure be nice to collect these dividends more often,” you don’t have to look far. While they’re not terribly common, American exchanges boast dozens of monthly dividend stocks.
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