Deposits And Fidelity: Auto-Invest For Smart Returns

Automating your investments with Fidelity can help you save more and reduce the temptation to spend. You can set up automatic deposits into your Fidelity account in several ways, including direct deposit of your paycheck or government check, or automatic deposits from your bank account. You can also choose to have your money automatically invested in mutual funds, stocks, ETFs, or basket portfolios. This can help you build a lasting routine and benefit from the power of compounding returns. Additionally, dollar-cost averaging can help mitigate the risk of market timing.

Direct deposit of a paycheck or government check to a Fidelity account

To set up direct deposit, you'll need to provide the Fidelity account's routing (ABA) number and account number to your employer, government agency, or third party. You can find your routing numbers on the Direct Deposit and Direct Debit Information page or on your Portfolio Summary page. It may take a couple of pay periods before your direct deposit is active, and your employer should send a confirmation when the setup is complete.

You can also set up recurring investments in stocks, mutual funds, ETFs, and Fidelity Basket Portfolios directly from your Fidelity account or your bank. You can set the amounts, frequency, and timing of your recurring investments and change them whenever needed.

Additionally, you can automate recurring automatic deposits and withdrawals from your linked bank account to your Fidelity account. You can also schedule transfers between your Fidelity accounts.

Automatic deposits from a bank account or Fidelity Cash Management account to specific investments

Setting up automatic deposits from a bank account or Fidelity Cash Management account to specific investments can be a powerful way to grow your portfolio and reach your financial goals. Here's a detailed guide on how to set up automatic deposits and some benefits of doing so:

How to Set Up Automatic Deposits:

• Prerequisites: Before setting up automatic deposits, ensure you have at least one mutual fund in your Fidelity account. This is because you can currently only auto-invest in mutual funds you already own.
• Login: Log in to your Fidelity account and go to the specific URL provided by Fidelity for setting up automatic investments.
• Click "Set up Automatic Investments" Button: This will take you to a page where you can select the account for which you want to set up automatic investing.
• Select Account and Transfer Option: Choose the account you wish to set up automatic investing for and select the appropriate transfer option. You can choose to transfer funds from an external bank account, transfer and then invest from an external bank account, or invest funds from your core position.
• Configure Auto-Investing Schedule: You will be directed to a page where you can set up your auto-investing schedule. Here, you can select the bank you wish to transfer money from and choose whether to transfer to your brokerage core account or automatically invest in mutual funds you own.
• Add New Bank Account (Optional): If you want to transfer funds from a new bank account, click on the provided link to go through the steps to set up an electronic funds transfer.
• Enter Transfer Amount: Decide on the amount you want to automatically transfer and invest from your bank account. It's important to ensure this amount is suitable for your financial situation.
• Set Investment Schedule: Choose the frequency of your automatic deposits. The options provided are monthly or quarterly, but you can also set up multiple schedules to achieve daily or weekly deposits if desired.
• Review and Finalize: Review your auto-investing schedule and make any necessary adjustments. Once you're happy with the schedule, finalize it.

Benefits of Automatic Deposits:

• Dollar-Cost Averaging: By investing a fixed amount regularly, you can take advantage of dollar-cost averaging, which helps reduce the impact of market volatility by spreading out your contributions over time.
• Reduced Stress: Automatic deposits remove the stress of daily stock market fluctuations and allow you to focus on long-term investing.
• Out of Sight, Out of Mind: By automatically withdrawing money from your bank accounts, you reduce the temptation to spend extra income.
• Discipline and Convenience: Automatic deposits ensure that you consistently invest without having to manually transfer funds and make investment decisions regularly.

By following these steps and understanding the benefits, you can effectively set up and utilize automatic deposits from a bank account or Fidelity Cash Management account to specific investments, helping you work towards your financial goals with less stress and more discipline.

Recurring investments in stocks, mutual funds, ETFs, and Fidelity Basket Portfolios

Recurring investments are a great way to help grow your portfolio automatically. You can choose recurring investments in stocks, mutual funds, ETFs, and Fidelity Basket Portfolios directly from your Fidelity account or your bank.

• Build a lasting routine: You can apply the principles of seasoned investors for potential growth. Recurring investments can help you benefit from the potential of compounding returns to help grow your portfolio over time.
• Help manage volatility: Investing the same amount at regular intervals (dollar-cost averaging) can help reduce the impact of volatility over time. This means you can worry less about timing the market while working towards your growth goals.
• Use baskets for efficiency: Fidelity Basket Portfolios let you create baskets of stocks and ETFs that you can manage as one investment. Adding recurring investments to baskets can make it even easier to reach your goals.

You can set the amounts, frequency, and timing of your recurring investments and change them whenever needed. There are no commissions for online US stock and ETF trades.

Here's how to get started:

• Log in to your Fidelity account: Go to "Your recurring activity" on Fidelity.com or the Fidelity Mobile app to set up and manage recurring investment options.
• Choose your accounts: Select the accounts you want to create recurring investments for, such as brokerage, cash management, or retirement accounts.
• Set the transaction details: Decide on the amount, frequency, and day of your choosing for your recurring transactions.
• Automate your trades: Automate your stock, mutual fund, ETF, or basket trades by setting up recurring investments from your Fidelity core (cash) position or linked bank account.

You can also set up direct deposits or automatic deposits into your Fidelity account to fund your recurring investments. Direct deposits can be set up for paychecks, Social Security, or pension benefits, while automatic deposits can be scheduled from your bank or Fidelity Cash Management account.

Dollar-cost averaging

For example, you might decide to invest $1,000 a month for 5 consecutive months in a stock trading at $20 per share. If the stock price declines after your initial trade, you will be investing at lower prices (i.e., a lower average stock price compared with the initial price). This can serve as a risk management strategy, helping you avoid making counter-productive decisions due to emotions like fear or greed.

However, if the stock price rises over the course of your fixed investments, you will end up buying fewer shares than if you had made a lump-sum investment at the outset. Additionally, funds in waiting are typically held in cash or cash equivalents that earn very low rates of return.

Automatic reinvestment of dividends

Dividends can be automatically reinvested in the fund that generated them. This can be done by setting up automatic deposits from a bank account or Fidelity Cash Management account to specific investments. This can be done by logging in on Fidelity.com or using the Fidelity Mobile app and going to 'Your recurring activity'.

There are a few things to keep in mind when setting up automatic reinvestment of dividends. Firstly, you can only auto-invest into mutual funds that you already own. Secondly, there may be transaction fees for buying non-Fidelity mutual funds. Thirdly, you will need to decide on the amount, frequency, and timing of your reinvestments. Finally, you will need to keep an eye on the performance and expense ratios of the mutual funds you are investing in.

Frequently asked questions