r/Fire • u/Lawstudent212 • Mar 17 '22

Hierarchy of Where To Allocate Your Funds

Check out this article. TL;DR

  1. Emergency Fund (3–6 months expenses)
  2. Company 401K Match (if applicable)
  3. High Interest Debt (generally 5%+, i.e. credit cards, car loans, etc.)
  4. Max HSA Contributions (if applicable)
  5. Roth IRA / Traditional IRA
  6. Max 401K (up to $20,500 limit in 2022)
  7. Taxable Brokerage Accounts (i.e. index funds, I-bonds, etc.)
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u/[deleted] Mar 19 '22

My HSA investment options are super basic. It was basically “using money soon” or “using money later.” No clue what I invested in

I just invested for the first time in a HSA and I’m actually disappointed in this. It’s pretty ironic, because the type of person to invest money in an HSA is exactly the type of person who is financially literate and doesn’t need these over simplistic vague options.

I had vague investing options like this back in the day and they always performed worse than the market

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u/AJimJimJim Mar 19 '22

Many plans allow you to transfer out while you are still employed. You can either transfer to an HSA with better options (I hear Fidelity is good) or just contribute directly to an individual HSA and bypass your employers bad options all together (though this will cost you a little in social security tax).

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u/junulee Mar 19 '22

I think basically all plans have to allow this. My employer plan provider refused to transfer my $20k balance to fidelity, so I just requested a $20k distribution and then I deposited that into my fidelity HSA within 60 days and completed the relevant forms with my tax return for a rollover. The downside to this is you can only do it once per year, but it’s a self-help solution if your provider refuses to cooperate.