Fidelity's Automatic Investment Feature: A Smart Way To Invest

Fidelity offers automatic investments, allowing you to automate your saving and investing by establishing regular transfers into your investment account. This can be done through direct deposits from your paycheck or recurring bank transfers. The frequency of these investments can be set to daily, weekly, monthly, or quarterly, and you can invest in stocks, mutual funds, ETFs, and Fidelity Basket Portfolios. Automatic investments can help you save time, reduce the temptation to spend, and ensure that you are consistently investing, no matter what is going on in your life.

Dollar-cost averaging (DCA)

With DCA, you invest equal portions of your money at regular intervals, regardless of the ups and downs of the market. For example, instead of investing $10,000 all at once, you might split that amount into 10 parts and invest $1,000 a month for 10 months.

DCA can help take the emotion out of investing. It compels you to continue investing the same amount regardless of the market's fluctuations, helping you avoid the temptation to time the market. You buy more shares of an investment when the share price is low and fewer shares when the price is high. This can result in paying a lower average price per share over time.

DCA can also help limit your losses in the event the market declines. It also helps you get your money to work on a consistent basis, which is a key factor for long-term investment growth.

However, investors who engage in DCA may forfeit potentially higher returns. With this strategy, you're holding onto your money as cash longer, which often produces lower returns than lump-sum investing, especially over longer periods.

Fidelity offers recurring investments, which is a form of DCA. With Fidelity, you can set up automatic investments into funds, stocks, bonds, ETFs, etc., from your bank account or your Fidelity brokerage, retirement, or other eligible accounts. You can set the amounts, frequency, and timing of your recurring investments and change them whenever needed.

Reduced stress

Automatic investments can help to reduce stress by removing the need to constantly monitor the stock market and make manual investment decisions. With automatic investments, your money is invested according to a fixed schedule, regardless of market conditions. This can be especially beneficial for long-term investors who can set up their investments on autopilot and track their performance over time.

Additionally, automatic investments can help to reduce the temptation to spend extra income. By automatically withdrawing money from your bank accounts, you can avoid the temptation to spend money that is sitting in your account. This can be beneficial for those who lack the discipline to consistently transfer money into a brokerage account and invest over time.

Another way that automatic investments can reduce stress is by simplifying the process of investing. With automatic investments, you don't have to worry about remembering to make regular transfers or investments. This can free up your time and mental energy to focus on other things.

Furthermore, automatic investments can help to reduce the impact of market volatility. By investing a fixed dollar amount consistently every week or month, you can benefit from dollar-cost averaging. This strategy involves spreading out your contributions over time instead of investing a lump sum all at once, which can help to reduce the impact of market fluctuations.

Overall, automatic investments with Fidelity can help to reduce stress by providing a hands-off approach to investing, removing the need to constantly monitor the market, and simplifying the process of building your investment portfolio over time.

Out of sight, out of mind

Fidelity offers a variety of options for automatic investments, including recurring investments in stocks, mutual funds, ETFs, and their own Fidelity Basket Portfolios. You can choose the accounts you want to invest in, set the amounts, frequency, and timing of your investments, and even change them whenever you need to. This flexibility allows you to customise your investment plan to fit your financial goals and preferences.

Setting up automatic investments is simple and can be done directly through your Fidelity account. Once you've logged in, you can select the "Set up Automatic Investments" button, choose the account you want to set up, and then decide on the transfer type. You can choose to simply transfer funds from your bank account to your investment account or transfer and then invest those funds in a mutual fund. Fidelity also offers the option to invest funds directly from your core position in your investment account.

With automatic investments, you can take advantage of dollar-cost averaging, a strategy that involves investing a fixed dollar amount at regular intervals. This helps to reduce the impact of market volatility by spreading out your contributions over time. It also eliminates the stress of trying to time the market, as you're investing consistently regardless of market highs and lows.

By utilising Fidelity's automatic investment feature, you can put your financial plan into action without having to constantly think about it. It's a way to ensure that you're regularly saving and investing towards your goals, all while reducing the temptation to spend. So, if you're looking to grow your wealth over time, consider setting up automatic investments with Fidelity and let the power of "out of sight, out of mind" work for you.

Lack of discipline

By setting up automatic investments, individuals can ensure that money is regularly transferred from their bank accounts into their investment accounts without any effort on their part. This eliminates the need for manual transfers and reduces the temptation to spend the money instead of investing it.

For example, with Fidelity's automatic investing feature, individuals can choose to have recurring investments in stocks, mutual funds, ETFs, and Fidelity Basket Portfolios. They can set the amounts, frequency, and timing of these investments and make changes as needed. This helps establish a consistent investing routine, ensuring that they are investing regularly without having to constantly think about it or worry about market timing.

Additionally, automatic investing can be particularly beneficial for those who lack the time or discipline to manually transfer and invest money on a regular basis. By automating the process, individuals can ensure that their money is consistently put to work in the market, potentially capturing growth opportunities that they might otherwise miss due to inactivity.

In conclusion, a lack of discipline is a common challenge for many individuals when it comes to personal finance and investing. However, by leveraging tools like automatic investing offered by companies such as Fidelity, individuals can overcome this issue and take a more disciplined approach to growing their wealth over time.

Automated investment plans

Fidelity offers automated investment plans to help you grow your money. These plans allow you to make regular investments in stocks, mutual funds, ETFs, and Fidelity Basket Portfolios directly from your Fidelity or bank account. With automated investing, you can set the amounts, frequency, and timing of your investments, and easily adjust them as needed. This helps to reduce the impact of market volatility and the temptation to spend, allowing you to stay focused on your financial goals.

To get started with automated investing, you can follow these steps:

• Log in to your Fidelity account and go to the "Cash Management" or "Recurring Activity" section.
• Click on the "Set up Automatic Investments" button, which will take you to a page where you can select the account you want to set up.
• Choose the type of transfer or investment you want to set up. You can transfer funds from an external bank account, or you can transfer and invest funds from an external bank account.
• Select the bank account you want to transfer money from and the account you want to transfer it to. You can choose between your brokerage core account or mutual funds you own.
• Enter the amount you want to automatically transfer and invest. The minimum amount for auto-invest is $10.
• Set up your investment schedule, choosing between monthly or quarterly frequencies. If you want to invest more frequently, you can set up multiple schedules.
• Review and finalize your schedule. You can also edit or skip specific months if needed.

By setting up automatic investments, you can benefit from dollar-cost averaging, reducing the stress of daily stock market swings, and removing the temptation to spend extra income. It also helps you stay disciplined by regularly transferring money into your investments without having to remember to do so manually.

Frequently asked questions