How Does Automatic Rebalancing for HSA Work?

Your health savings account (HSA) can grow substantially over time with the right investments. While you can use funds to pay for qualified medical expenses now, many also opt to save that money for the future. Opening an HSA and investing its funds is a smart financial move any way you look at it, but what if your goals and healthcare needs change? Master your investments: learn what is automatic rebalancing! Dive into valuable insights on this website for smarter portfolio management.

That's where HSA rebalancing comes in. But what is automatic rebalancing, and why do you need it?

What is Automatic Rebalancing?

Rebalancing is a process that allows you to review your objectives and risk tolerances. During an HSA rebalance, you can adjust investments and asset allocation to align with future goals. It can help minimize risk, keep your investments in check and increase the chances that you'll receive a certain return percentage that works for you.

Everyone's needs change and yours will likely evolve the longer you keep your HSA. Rebalancing allows you to ensure that your HSA investments continue to benefit you in the short- and long-term.

The Benefits of Automatic Rebalancing

The beauty of HSA investment is that it can be as hands-off as you want. That includes rebalancing. Many HSA providers have automatic rebalancing features that you can turn on and off as necessary. If enabled, you can choose how often to rebalance your HSA. Whether you do it monthly or annually, this feature realigns your portfolio allocation based on future investment elections.

Make adjustments, review your goals and change your risk tolerances. Then, let the automatic rebalancing tools handle the rest.

The biggest benefit of automatic rebalancing is that it helps you stay on track. It's a way to maintain the right asset location strategy for maximum and efficient growth. You get to decide your risk tolerance based on your needs. That could be to grow your funds as much as possible or to stay relatively safe. Either way, rebalancing helps you maintain the balance of investing risks suitable for you.

Even if market returns throw things off, rebalancing gets you back on your desired track.

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