First Dollar is a new Health Savings Account (HSA) provider that’s raised $19M in venture funding and is headquartered in Austin, Texas. First Dollar is available to individuals and employers. The following report focuses solely on the investment account (TD Ameritrade Brokerage) offered by First Dollar. For more details on other aspects of the First Dollar offering click here.

Report Card for First Dollar

as an Investment Vehicle

Investment Threshold

The ideal investment 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 doesn’t hold your dollars hostage in a checking account earning little to no interest. 

First Dollar has no investment threshold requirement. First Dollar is one of five administrators in our study that allows first dollar investing.

Brokerage Account

First Dollar has connected with TD Ameritrade to provide HSA investors with full control over their investment strategy and goals. A TD Ameritrade self-directed brokerage account gives investors access to stocks, bonds, CDs, ETFs, and more than 13,000 mutual funds.

TD Ameritrade excels at offering low-cost and low-minimum funds, with over 11,000 mutual funds on its platform with expense ratios of 0.50% or less, and over 10,000 with investment minimums of $100 or less. This includes over 4,000 no-transaction-fee mutual funds which is equal to or exceeds what's offered at other big-name brokers like Charles Schwab and Fidelity. Commissions for online US stock, ETF and option trades at TD Ameritrade are $0. This enables investors to dollar cost average into ETFs and / or stocks at no cost. It's an ideal broker for beginner fund investors.

In November 2019, Charles Schwab announced its acquisition of TD Ameritrade. The deal is expected to close at the end of this year. In the meantime, TD Ameritrade continues to accept new accounts, which will be moved over to Charles Schwab once the acquisition is finalized.

Fees & Commissions

Condensed Schedule of Fees (Non-Employer Group)

In our study of the top brokerage HSAs, First Dollar ranks at the very top when it comes to fees. In fact, First Dollar does not charge an investment fee. On top of that TD Ameritrade does not charge commissions on online stocks, options and ETF trade and a large selection of mutual funds making it a sweet deal for investors.

Projected Fees

In this section, we have a little fun projecting fees for each administrator. Our goal for this exercise was to find the lowest possible fees for each administrator. Keep in mind, we assumed the HSA was being used solely for investment purposes, therefore only certain fees applied. 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.

  • Total Stock Market Index (VTI / VTSAX / SPTM/ FZROX) or S&P 500 index (IVV / VIIIX / VFIAX). We believe these two index funds are one and the same.

• No transaction fee (NTF) or commission-free ETF programs were utilized to buy 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 First Dollar we made the following assumptions:

1. All assets were invested in SPTM ETF (expense ratio 0.03%)

2. SPTM is a commission-free ETF. No transaction costs incurred.

3. Annual Investment Fee: $0

Under these assumptions, the only fee investors will incur is the SPTM ETF expense ratio fee (0.03%).

The following chart illustrates where First Dollar stands in terms of fees compared to the other top investment HSA administrators.  

Features

In our search for the very best investment HSAs, we looked for administrators that offered a hassle-free investment experience. First Dollar makes it incredibly easy for HSA investors to manage their account with its intuitive website, automated account transfers, and receipt storage tool for "shoeboxers".

Pros & Cons

A First Dollar Brokerage 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

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