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. For employers with more than 10 employees enrolled it's $3.50 a month per employee. Lively is unique in that it is a software entity and not a banking company like most other HSA administrators.
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 six 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. A potential solution for this group of investors is a systematic investment plan. With a systematic investment plan there is $49.99 transaction fee on the first purchase, with ensuing contributions being free of charge. Unfortunately, you can only institute a systematic investment plan 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 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.
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 easy to navigate website, automated account transfers, and receipt storage tool for "shoeboxers".
With Lively you can set up scheduled recurring deposits from your bank checking account to the HSA checking account.
Automated transfers between the HSA account and TD Ameritrade (TDA) can be set up. One thing to note is that you must manually invest your HSA dollars once they reach the TDA brokerage account. The implementation of an automatic investing plan would be the only way to have HSA dollars automatically flow into investments on a periodic basis.
TD Ameritrade does not offer an auto-rebalance feature. Manual rebalancing is required.
TD Ameritrade does offer a free dividend reinvestment service free of charge, on most exchange-listed and NASDAQ stocks, ETFs, mutual funds, and ADRs. The stock and ETF dividend reinvestment plan (DRIP) allows you to reinvest your cash dividends by purchasing additional shares or fractional shares. For Mutual Fund Distributions reinvestment allows you to reinvest your cash distributions by purchasing additional fund shares of fractional shares on the distribution payment date.
Lively’s dashboard allows you to keep track of receipts as well as categorize each transaction by type. Tagging each transaction will help to filter down your list as it grows. Additionally you can input a description or note for each transaction, this way you can remember exactly what each purchase was for.
Lively's intuitive dashboard makes HSA accounts simple to manage. The dashboard displays your HSA balance and investment balance. In the investment balance window there is a "My Positions" tab and an "Activity" tab, that displays positions and transaction info from TD Ameritrade. The dashboard also has a very simple interface to Transfer or Withdraw funds from the TD Ameritrade self directed brokerage account.
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.