Best asset class to hold HSA living in California?

[Surftrunks]

I just started contributing to a HSA through my new employer. I live in California and the HSA is with fidelity. My overall investment plan utilizes a 4 fund portfolio with total US stock, total international stock, total bond, and a REIT index fund. I have a number of low cost investment choices within the HSA plan and there are good low cost funds for each of my 4 asset classes. Since my HSA will be a small part of my investments I would like to pick just one asset class to house in my HSA. I read that in California we still have to pay state taxes on our HSA earnings. Did this complicate my taxes or investment holdings? With this in mind, what asset class should I hold in my hsa? (total US stock, total international stock, total bond, or a REIT index fund)

Thank you

[CordMcNally]

Total US stock. Despite having to pay state taxes, your goal should still be growth.

[Surftrunks]

Any reason to not put REIT investments in the HSA?

[CordMcNally]

If you include your HSA in your total asset allocation then try to put in whatever fits into your asset allocation and fits best in a tax advantaged account. Total US stock does give you a small amount of real estate exposure.

[Tom Kazansky]

I use VTI, and include the dividends when calculating CA tax (also small amount of interest from the mandatory savings account)

[G]

Any reason to not put REIT investments in the HSA?

What Cord said, why not just put in a total market pick?

And what Tom said, don't let the tail wag the dog worrying about taxes.

[billy]

IF you hold bonds as part of your allocation, the HSA is a good place to hold treasury bond funds/treasury bonds for people living in california or NJ- States cant tax it, and since its an HSA the fed doesnt either. Its what I do in NJ, also this way I dont have to worry about keeping records for state taxes- HSAs dont give you all the end year paperwork like taxable brokerages do.
But if you do not want any bonds in your portfolio, yeah go with a total stock market index fund.

[Surftrunks]

Thanks. I'll use a total stock market fund or look into a treasury bond fund

[Panscan]

crypto, go big or go home