Changing Investment Objectives: A Guide For Fidelity Users

Changing your investment objective at Fidelity is a straightforward process that can be done through various methods, including online tools, phone assistance, and mail communication. Before making any changes, it is essential to evaluate your current investments, determine your investment goals, research different options, and consider the potential risks involved. By following these steps and utilizing the tools and resources provided by Fidelity, you can successfully update your investment objective to align with your financial goals and risk tolerance.

Evaluate current investments

Evaluating your current investments is an essential step when considering changes to your investment strategy. This process involves a few key considerations:

Performance Analysis

Begin by examining key performance metrics such as return on investment (ROI), volatility, and the Sharpe ratio. Compare the historical performance of your investments to relevant benchmarks to determine whether they have met, exceeded, or fallen short of expectations. This will help you identify areas where your investments are thriving or underperforming.

Risk Assessment

It is crucial to assess the risk associated with your current investments. Analyze factors such as beta, standard deviation, and maximum drawdown to understand the level of risk you are exposed to. This evaluation will enable you to make informed decisions about managing and mitigating risk in your portfolio.

Alignment with Financial Goals

Consider whether your current investments align with your short-term and long-term financial goals. For example, if your goal is long-term wealth accumulation, evaluate if your current investments are on track to meet this objective. Alternatively, if your goals are more short-term focused, assess whether your investments are helping you achieve those milestones.

Benchmarking

Compare your investments with similar investments in the market or industry. This will help you understand how your investments stack up against the competition and identify areas where you may need to make adjustments to stay competitive.

Expenses and Fees

Understanding the fees associated with your investments is crucial. Even small differences in costs can accumulate over time and impact your overall returns. Evaluate the fee structures and expense ratios of your current investments to ensure they are not eroding your investment performance.

By following these steps, you can gain a comprehensive understanding of your current investments and make well-informed decisions about potential changes to your investment strategy. Remember, regular evaluation and monitoring of your investments are essential to ensure they remain aligned with your financial objectives and risk tolerance.

Determine investment goals

The first step in modifying your investments in Fidelity is to determine your investment goals and align them with your financial objectives and contribution allocation. This crucial process sets the foundation for your investment strategy and long-term financial success.

By clearly defining your investment goals, you can tailor your contribution allocation to reflect these objectives, whether they are capital preservation, growth, or income generation. Understanding how your investments align with your financial goals not only provides clarity but also helps in making informed decisions about where to allocate your assets.

It ensures that your investment choices are in sync with your broader financial plan, ultimately working towards securing your financial future. For instance, if your goal is to save for retirement, you might opt for a traditional or Roth 401(k) plan, whereas if you're saving for a down payment on a house, you might choose a different type of investment vehicle with easier access to your funds.

When determining these goals, it's important to understand the distinction between long-term and short-term investments. Long-term investments, such as retirement planning or education funds, require patience and discipline, aiming for steady growth over an extended period. Short-term investments, on the other hand, are typically more focused on immediate returns or specific financial milestones.

By linking these investment goals to your overall financial planning, you can create a cohesive strategy that guides your investment choices and helps you stay on track towards achieving your desired financial outcomes.

Tips for Setting Investment Goals

• Start with your financial priorities: Consider your short-term and long-term financial goals, such as saving for a house, retirement, or your child's education. Prioritize these goals and allocate your funds accordingly.
• Understand your risk tolerance: Assess how much risk you are comfortable taking on. This will influence the types of investments you choose and the level of potential returns you can expect.
• Diversification: Diversifying your portfolio can help manage risk and improve your risk/return relationship. Spread your investments across different asset classes, sectors, and industries to minimize the impact of market fluctuations.
• Regular review: Periodically review and adjust your investment goals to reflect any changes in your financial situation, risk tolerance, or market conditions. This will help ensure that your investment strategy remains aligned with your goals.

Research different options

Researching different investment options is a critical step when changing your investments in Fidelity. This step empowers you to make well-informed decisions and strategically adjust your portfolio. Here are some key considerations to help guide your research process:

Historical Performance

Analyzing the historical performance of various investment options provides valuable insights. By evaluating how investments have fared in different market conditions, you can make more informed choices. Consider factors such as historical returns, expense ratios, and investment styles when comparing different investment opportunities.

Risk Factors

Understanding the risk factors associated with each investment option is essential. Evaluate the potential downsides and assess whether the potential returns justify the risks involved. Consider factors such as volatility, beta, standard deviation, and maximum drawdown to gauge the level of risk exposure. This assessment will help you manage your overall portfolio risk effectively.

Diversification

Diversification is a key strategy to reduce risk and enhance potential returns. By allocating your investments across different asset classes, industries, and geographical regions, you can spread your risk. Explore a range of investment avenues, including stocks, bonds, mutual funds, ETFs, and alternative investments such as real estate, commodities, private equity, or hedge funds.

Fundamental and Technical Analysis

Conduct in-depth research on the fundamental factors that drive the performance of an investment over time. For example, earnings are a core driver of a stock's long-term performance. Additionally, consider using technical analysis, such as charts and data, to identify trends and patterns that can guide your buying and selling decisions.

Online Screeners and Tools

Utilize online screeners and tools provided by Fidelity and other reliable sources to generate investment ideas and analyze potential opportunities. These tools can help you search for investments based on fundamental and technical factors, set up watchlists to track new ideas and existing holdings, and access performance metrics and fund details.

Independent Experts' Analysis

Consider incorporating the analysis and ratings of independent experts, such as the Thomson Reuters StarMine Equity Summary Score, to enhance your decision-making process. These insights can provide valuable perspectives and help you assess the opinions of third-party analysts.

Remember, it is crucial to tailor your investment choices to your specific goals, risk tolerance, and time horizon. By actively engaging in thorough investment research, you can optimize your investment strategy and work towards achieving your financial objectives.

Make changes to your account

Once you have researched and decided on new investment options, you can proceed to make changes to your Fidelity account. This can be done through online account management tools or by contacting Fidelity's customer service team for assistance.

To access the online management platforms, simply log into your account and navigate to the 'Manage Investments' section. From there, you will be able to select the specific holdings you wish to modify and input your updated investment choices. The platform typically provides prompts and guidance to ensure a smooth transition.

It is important to note that you should regularly monitor your account after making adjustments. This will allow you to stay informed about the performance of your investments. Fidelity's online tools offer real-time updates and insights, enabling you to track the impact of your changes and make informed decisions for the future growth of your investment portfolio.

If you prefer, you can also contact Fidelity's customer service team, who will be able to provide personalised assistance and guidance in adjusting your investments. They can help you navigate the various investment options available and address any questions or concerns you may have.

When making changes to your Fidelity account, it is crucial to consider your risk tolerance and investment time horizon. This will help you select investment options that align with your comfort level and goals. Additionally, monitoring fees and expenses is important as they can impact your overall investment growth over time.

Regularly monitor and review

Regularly monitoring and reviewing your investment portfolio is essential to ensure it remains aligned with your financial objectives and market trends. Here are some key considerations for proactive portfolio management:

Monitoring and Adjusting

It is recommended to review your investment mix at least annually or whenever your financial circumstances change significantly. Active investors should monitor their positions more frequently, depending on their time horizon. Fidelity's online tools and mobile apps make it easy to stay updated, allowing you to log in and access real-time information about your investments. Alerts can also be set up to track news, analyst rating changes, or other factors impacting your investments. By staying informed, you can make timely adjustments to your portfolio when needed.

Risk and Return

When monitoring your investments, pay close attention to the risk and return associated with each trade. Assess whether each investment still aligns with your objectives, risk tolerance, and required return. If there are any discrepancies, adjust your positions accordingly. For example, if an investment is taking on more risk than you are comfortable with, consider reallocating your funds to reduce exposure to that particular asset or strategy.

Portfolio Impact

Consider the impact of individual trades on your overall investment objectives. If you have a desired asset allocation, ensure that each buy or sell decision aligns with that allocation. Fidelity's online platform allows you to view your entire portfolio or evaluate specific investments through a watchlist. Tools like Fidelity's Performance & Analysis experience can provide valuable insights into your current portfolio and help you make informed decisions.

Tax Implications

Keep in mind that as your investments grow or change, so do the tax implications. Short-term capital gains, for instance, are taxed at higher rates than long-term capital gains. Therefore, consider the tax consequences of selling assets within your portfolio and how they fit into your overall tax strategy. While tax implications are important, they should not be the sole factor driving your investment decisions.

Seeking Professional Guidance

If you need help navigating the complexities of investing, consider seeking advice from a qualified financial advisor. They can provide valuable insights, create personalized financial plans, and offer tailored investment recommendations based on your risk tolerance, time horizon, and financial goals. Their ongoing support can help you make confident and well-informed decisions about your investments.

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