Fidelity's Principal-Guaranteed Investment: Is It Worth It?

Fidelity is a well-rounded brokerage offering a range of investment options, including stocks, bonds, mutual funds, ETFs, options, forex, and cryptocurrencies. While it does not offer futures trading, it provides a selection of no-expense-ratio index funds and over 3,300 no-transaction-fee mutual funds. In addition, Fidelity offers protection for its customers' assets through the Customer Protection Guarantee, which covers losses from unauthorized account activity. It also provides FDIC insurance for cash deposits up to $5 million and SIPC insurance for securities up to $500,000. With its low costs, extensive educational resources, and advanced trading platforms, Fidelity caters to both active traders and beginner retirement investors.

Fidelity's Customer Protection Guarantee

Fidelity also provides guidelines to protect customer accounts, such as using unique usernames and passwords and never sharing account access information. Additionally, customers are advised to visit Fidelity's security webpage to learn more about safeguarding their accounts.

The Customer Protection Guarantee does not cover losses arising from unauthorized access through means other than Covered Accounts. It also excludes accounts held outside of Fidelity and certain products like annuities and insurance products. Credit and debit card transactions, physical theft, and fraud related to these are also not covered under this guarantee; instead, customers are referred to the terms and conditions sent with the card or first set of checks.

Fidelity's FDIC-Insured Deposit Sweep Program

The Money Market Mutual Fund Overflow is a component of the FDIC-Insured Deposit Sweep Program. It comes into play when cash balances exceed FDIC insurance coverage limits or cannot be swept to a Program Bank due to a lack of bank capacity or unavailability of FDIC insurance. In such cases, your funds will be swept into the Money Market Overflow feature. While in the Money Market Overflow, your funds will be the first to be used to settle any debits or withdrawals from your account. It is important to note that funds held in the Money Market Overflow are not FDIC-insured.

Fidelity's Zero-Expense-Ratio Index Funds

• Fidelity® ZERO Large Cap Index Fund (FNILX)
• Fidelity® ZERO Extended Market Index Fund (FZIPX)
• Fidelity® ZERO Total Market Index Fund (FZROX)
• Fidelity® ZERO International Index Fund (FZILX)

These funds aim to provide investment results that correspond to the total return of a broad range of companies, from large-capitalization to small-capitalization, across the US and international markets.

Fidelity introduced these funds to offer value to its customers by eliminating expense ratios and minimum investment requirements. The company also offers zero minimum investment mutual funds, no account fees for retail brokerage accounts, and 24/7 live customer service.

While these zero-expense-ratio funds have no minimum investment requirement, it is important to note that they are only available to individual retail investors with a Fidelity brokerage account. They are not portable to another brokerage and are not available in employer plans (401k, etc.).

Fidelity's Trading Platforms

Fidelity offers a range of trading platforms and tools to cater to investors of all levels, from beginners to advanced traders. Here is an overview of the platforms available:

Fidelity.com

Fidelity's website provides award-winning research, in-depth analytics, and idea generation tools integrated with an easy-to-use trading ticket. It is recommended for intermediate and advanced investors. The platform offers real-time market data, research ideas, and trade execution capabilities and works on any browser.

Active Trader Pro

Active Trader Pro is a downloadable desktop platform with a customizable interface. It includes intuitive shortcuts, a pre-built market, technical and options filters, advanced options tools, and a multi-trade ticket that can store orders and place up to 50 orders simultaneously. It also allows users to trade over-the-counter securities and access IPOs. This platform is recommended for advanced users.

Fidelity Mobile App

The Fidelity mobile app is an easy-to-use, award-winning app that puts all your investment activity in one place. It allows users to view, manage, and take action on their portfolio 24/7. The app includes real-time quotes, multi-leg options trading, a consolidated version of the company's research offerings, and a notebook to save ideas and articles from your mobile browser. It is recommended for beginners, intermediate, and advanced investors.

Trading Dashboard

The Trading Dashboard is a single-screen platform that provides a comprehensive view of your trading activity. It offers real-time market data, research capabilities, and trade execution. This platform is recommended for intermediate and advanced traders.

Fidelity's platforms offer a range of features, including advanced screeners, research and strategy-testing tools, real-time quotes, and customizable displays. The company also provides industry-leading research and analysis from third-party experts, such as Zacks Investment Research and Argus, to help inform your trading strategies.

Fidelity's Retirement Accounts

Fidelity offers a range of retirement accounts to help you save for the future. Here are some of the most common retirement accounts offered by Fidelity:

K)

More than 60 million Americans have a 401(k), making it one of the most popular ways to save for retirement. With a 401(k), you can set aside a portion of each paycheck into an account and invest in things like mutual funds and ETFs. Many employers match your contributions up to a certain percentage of your total salary. One of the most appealing aspects of a 401(k) is that your contributions are often made pre-tax, reducing your taxable income for the year. You only pay tax when you withdraw from the 401(k) plan, typically after age 59½ to avoid a 10% penalty.

B)

Nonprofit organizations and government agencies typically offer 403(b) plans, which are similar to 401(k)s. You can contribute pre-tax earnings, but withdrawals before age 59½ may result in high penalties and taxes.

B)

Like 401(k)s and 403(b)s, 457(b) plans allow you to contribute pre-tax earnings. However, you can withdraw your money penalty-free after leaving your job, as long as you haven't rolled in other 401(k) or 403(b) assets.

Traditional IRA

With a traditional individual retirement account (IRA), you can contribute up to the annual limit, and your contributions may be tax-deductible depending on your income and whether you have a workplace-sponsored plan. The money in the account can grow tax-free until you withdraw it in retirement, at which point you'll pay taxes on the income. Withdrawals before age 59½ may result in penalties.

Roth IRA

With a Roth IRA, you contribute after-tax dollars, and your contributions are not tax-deductible. However, any investment gains are typically tax-free in retirement if you meet certain conditions. Similar to a traditional IRA, withdrawing before age 59½ or without meeting the IRS's 5-year aging rule may result in taxes and/or penalties. There are no income limits to open a Roth IRA, but there is an income limit to be eligible to contribute.

Rollover IRA

A rollover IRA allows you to transfer your 401(k) or 403(b) to a new workplace or consolidate multiple workplace plans into a single account without taxes or penalties. It offers access to a wider range of investment options while preserving the tax benefits of your original plan.

Roth 401(k)

A Roth 401(k) combines the benefits of a traditional 401(k) and a Roth IRA. Contributions are made after taxes, and your money can grow tax-free. You don't pay taxes when you withdraw in retirement after age 59½. There are no income limits, and you must satisfy the 5-year rule to avoid penalties.

Health Savings Account (HSA)

An HSA is a tax-advantaged way to save for future healthcare costs and medical emergencies. To open an HSA, you need to be covered by an HSA-eligible high-deductible health plan. You can contribute pre-tax dollars, and your employer may match your contributions. You can use the money to pay for qualified medical expenses without paying taxes. Investing your HSA contributions in stocks, bonds, ETFs, or mutual funds can help your savings grow tax-free.

Frequently asked questions