Lively is a San Francisco, California based startup focused on creating HSAs that are simple to use and cost-effective for all. In fact, the basic HSA account is free for individuals and families, $2.95/month/employee for employers and just $2.50/month to invest. This is an unbelievable deal for a contemporary and intuitive product that was built around the consumer and their spending, saving, and investing needs.
for Lively as an investment vehicle
The ideal investment health savings account (HSA) has no investment threshold, allowing the very first dollar you contribute to be invested. If you're using an HSA for investment purposes, seek an administrator that does not hold your dollars hostage in a checking account earning little to no interest.
Lively has no investment threshold requirement. Lively is one of five administrators in our study that allows first dollar investing.
Lively offers a TD Ameritrade self-directed brokerage account which gives investors access to stocks, bonds, CDs and mutual funds. TD Ameritrade used to have an awesome commission-free ETF program, which included many low-cost index funds from Vanguard and I-Shares. However, TD Ameritrade recently announced a change in the funds offered via their commission-free ETF program. They dropped all of the Vanguard and most of the I-Shares ETFs on Nov. 21st, 2017.
Investors can still buy Vanguard and I-Shares ETFs, but have to pay a $6.95 commission for each trade. Unfortunately, this will increase transaction costs for those who trickle money into Vanguard ETFs on a regular basis. A potential solution for this group of Vanguard investors is a systematic investment plan. After the first purchase into the fund, you set up a system of future injections, say $100 or $1,000 every month or quarter. Once you program in how much and when money just flows from your HSA checking account into the fund of your choice. With a systematic investment plan, there is a $49.99 (TDA) transaction fee on the first purchase, with ensuing contributions being free of charge. The one drawback of systematic investment plans is that they can only be instituted with mutual funds.
The new TD Ameritrade commission-free ETF lineup is full of high expense ratio funds, but there are a few low-cost SPDR ETFs from State Street Global Advisors that are suitable for passive index investors. These funds include the SPDR Portfolio Total Stock Market ETF (SPTM), SPDR Portfolio World ex-US ETF (SPDW), SPDR Portfolio Emerging Markets ETF (SPEM), and SPDR Portfolio Aggregate Bond ETF (SPAB).
Interest-Bearing Account & CDs
Lively offers participants an FDIC-insured, interest bearing account. This is the default option when opening an HSA with Lively. Interest bearing accounts make sense for participants who are uneasy about investing their HSA dollars in the equity markets.
Another option for participants who want to park their money in safe interest accruing products are brokered CDs. Lively participants are able to access brokered CDs via the TD Ameritrade self-directed brokerage account. Brokered CDs are issued by banks but bought and sold through a brokerage. Interest rates offered by some brokered CDs via TD Ameritrade can be higher than those offered by Lively. Given that there is a $30 annual fee to access the TD Ameritrade brokerage account, brokered CDs only make sense for those with large balances. We strongly encourage you to conduct your own due diligence on brokered CDs and see if they make sense for you. A good starting point is this article by Fidelity Investments, where they explain the basics of brokered CDs.
Fees & Commissions
In our study of the top 10 investment HSAs, Lively ranks as the 2nd lowest cost provider. Lively charges its participants a palatable $2.50 per month investment fee. This is the only fee on the Lively fee schedule. Simple. Transparent. Refreshing.
In this section, we have a little fun projecting fees for each administrator. Our goal was to find the path to the lowest possible fees for each administrator. Keep in mind, we are assuming the HSA is being used solely for investment purposes, therefore only certain fees will apply. Given that every HSA is different, there is no perfect way to compare the top 10 administrators in our study. Nonetheless, we gave it a shot and believe there is value in presenting our findings.
In order to compare fees, we made a few simple assumptions:
Every dollar above the investment threshold was invested.
Current and future contributions were invested in a single fund.
No transaction fee (NTF) or commission-free ETF programs were utilized to buy the index funds.
If these index funds were not available under the NTF and/or commission-free ETF programs, we turned to the open market and executed a single trade per calendar year in order to keep transaction costs down.
For Lively we made the following assumptions:
All assets were invested in SPTM ETF (expense ratio 0.03%)
SPTM is a commission-free ETF. No transaction costs incurred.
Annual Investment Fee: $30
The chart below illustrates the projected fees on different average annual investment balances for Lively.
The following chart illustrates where Lively stands in terms of fees compared to the other top 10 investment HSA administrators.
As you can see, Lively's fees at every invested balance measured are extremely low compared to the other top 10 investment HSAs.
Tip - Use Personal Capital to keep track of your investment fees (commissions, expense ratio fees, custodial fees, etc.) Personal Capital’s Retirement Fee Analyzer Tool lets you see how fees impact your retirement.
Analyze your holdings with the Fee Calculator
See the impact of hidden fees on your retirement savings
Get projections on how these hidden management fees may cost you years off of your retirement.
In our search for the very best investment HSAs, we looked for administrators that offered a hassle-free investment experience. Lively makes it incredibly easy for HSA investors to manage their account with its intuitive website, automated account transfers, and a receipt storage tool for "shoeboxers".
Pros & Cons
A Lively HSA may be right for you if:
You are comfortable directing your own investments and desire a broad variety of investment options, such as mutual funds, ETFs, stocks, and bonds
You are satisfied with the investment options in the TD Ameritrade commission-free ETF list
You desire first dollar investing
You desire an online receipt storage tool
You understand that Lively is a startup
You are also planning on spending some of those HSA dollars. Lively is on our short list of the best HSAs for spenders.