patrick.net

Depends on who administers the HSA. I've had HSA's with Fidelity, HSABank, and Bank of America.

I've moved all of these assets into my HSABank account (via 'roll-overs' similar to an IRA) because :
1) BAC levied fees on the cash account regardless of balance (post employment) and locked you into their investment/ brokerage side - which wasn't good.
2) Fidelity was OK but the balance was less than $15k when I was fired for not getting COVID jabbed and I didn't want another orphan account.

From my HSABank account I opened a linked TD Ameritrade account that works like a regular brokerage. So i have a cash portion at HSABank (I think you have to maintain $5k balance to avoid fees), and both a cash and brokerage portion at TD. The TD account is transitioning over the Schwab (this weekend in fact) where it will also work like a regular brokerage account.

A note on the HSA roll overs. The BAC account I was able to transfer directly on line (it was all cash) so there was never any question that those new funds at HSA Bank were a roll over and not a contribution. However because of the way my employer structured the plan at Fidelity I had to do a snail mail roll over where I did a 100% distribution from Fidelity and then mailed that check to HSABank. It was dicey because I didn't want a taxable event. I think I had to direct Fidelity to make the check out to HSA Bank but I don't really remember.

I may have misunderstood the question "Where should I invest these funds?". Low ER Index ETF's are 90% of my portfolio because I've spent 10's of thousands of $$ to learn that I cannot pick individual stocks. I mainly use SCHD and SCHB these days because I've got most of my nut at Schwab.

I'm considering https://www.fidelity.com/go/hsa/investing-hsa-your-way. What would you think is a good yearly return? Not great but good?

I have a modest HSA account and it's at Fidelity.

An HSA account should be invested in capital appreciation stock mutual funds for maximum effect.
My HSA is invested in Fidelity Contrafund.

The method for using it is:
1. Fidelity sent me a debit card.
2. I funded the debit card by first going to Fidelity.com and selling some shares of my Contrafund. At Fidelity, this is a "trade" which may confuse some.
3. My debit card now had some money in it, which I used for a recent procedure, and also a dental bill.

You don't need to "convert" the HSA to a retirement account; if you choose to take money out for something which is not medical nor dental, that withdrawal is taxed just like a traditional IRA.