Fidelity's Auto-Invest: A Guide To Getting Started

Automating your investments with Fidelity can help you save more and grow your money. By setting up recurring investments, you can benefit from dollar-cost averaging, which helps to reduce the impact of market volatility and lower the risk of market timing. This method of investing also reduces the temptation to spend and overreact to market fluctuations, allowing you to stay focused on your long-term financial goals. To get started with automatic investing, you can follow these steps:

1. Log in to your Fidelity account.

2. Navigate to the Accounts & Trade tab, then select Account Features.

3. Expand Payments & Transfers and choose Automatic Transfers & Investments.

4. Click on Set up an automatic investment and select your preferred funding source.

5. Choose the accounts and set the amounts, frequency, and timing of your recurring investments.

6. Review and finalize your investment schedule.

By automating your investments with Fidelity, you can take advantage of the benefits of compound returns and potentially grow your portfolio over time, all while reducing the stress and decision-making typically associated with manual investing.

Dollar-cost averaging

Using dollar-cost averaging during bear markets within a diversified investment portfolio can position long-term investors well for an eventual recovery. This is because, when markets decline, it can be easy for investors' emotions to take over, and they may make decisions that undermine their overall financial state, such as selling into a down market and not reinvesting the proceeds. By committing to regular periodic investments, dollar-cost averaging can help take the emotions out of your investing decisions.

However, dollar-cost averaging does not assure a profit or protect against loss in declining markets. It also involves continuous investment, so you should consider your financial ability to continue purchases through periods of low price levels. It may also not be the best approach for investing a lump sum, as it can be more effective to invest a lump sum all at once, which carries more risk but may provide better returns.

Reducing stress

Automating your investments with Fidelity can help reduce stress by eliminating the emotional aspect of investing. By relying on data-driven analysis, market trends, and tailored recommendations, you can make investment decisions based on logic and analytics rather than impulses or sentiments. This helps to streamline the investment process, allowing you to focus on your financial goals with confidence and peace of mind.

Additionally, automatic investing can save you time and effort by leveraging online platforms, professional investment services, and continuous monitoring of your investments. The hands-off approach ensures that your financial goals are on track without requiring constant manual intervention.

With automatic investing, you can also benefit from dollar-cost averaging. This strategy involves investing a fixed amount regularly, regardless of market conditions. By buying more shares when prices are low and fewer when prices are high, dollar-cost averaging can help to smooth out the effects of market volatility and enhance long-term investment performance.

Another advantage of automatic investing is the consistent contribution to your investment portfolio. By setting up automatic contributions, you can steadily build wealth over time without being swayed by short-term market fluctuations. This disciplined approach to investing helps you stay committed to your long-term financial goals, even during times of market volatility.

Overall, by automating your investments with Fidelity, you can reduce stress, save time, and make more informed investment decisions. This can ultimately contribute to achieving your financial goals and securing your future.

Out of sight, out of mind

Automating your investments can be a great way to save and invest more. It can help you save time, reduce the temptation to spend, and ensure that you are investing regularly. One of the key benefits of automating your investments is that it takes the decision-making process out of saving and investing, allowing you to focus on other things. This is often referred to as "out of sight, out of mind".

With automated investing, you can set up regular transfers from your paycheck or bank account directly into your investment account. This way, you don't have to constantly think about saving and investing, and you can free up your time and mental energy for other things. It's like setting up a dishwasher or a programmable coffee maker – it's one less thing to worry about in your daily life.

One of the biggest advantages of automating your investments is that it helps you stay disciplined. Many people struggle with consistently transferring money into a brokerage account and investing over time. By automating your investments, you no longer have to worry about making those transfers manually, and your money is automatically invested on a regular basis. This can help you avoid the temptation to spend money that is sitting in your bank account and ensure that you are consistently investing towards your financial goals.

Additionally, automated investing can help you reduce the impact of market volatility. By investing a fixed dollar amount at regular intervals, you can benefit from dollar-cost averaging, which smooths out the highs and lows of the market. This means that you don't have to stress about daily swings in the stock market and can focus on your long-term investment horizon.

To set up automatic investing with Fidelity, you can follow these steps:

• Log in to your Fidelity account.
• Go to https://www.fidelity.com/cash-management/automatic-investments.
• Click the "Set up Automatic Investments" button, which will take you to a page where you can see a list of your accounts.
• Set up an automatic transfer or investment by selecting the account you want to automate.
• Choose from the following options:

• Transfer funds from an external bank account.
• Transfer and then invest funds from an external bank account.
• Invest funds from the core position (for funds already in your investment account).

Follow the instructions to configure your auto-investing schedule, including the amount, frequency, and timing of your transfers and investments.

Lack of discipline

Automatic investing is a great solution to this problem. By setting up recurring investments, you can ensure that your money is consistently invested according to a schedule, without requiring any additional effort on your part. This way, you can avoid the temptation to spend the money instead of investing it.

• Reduces the temptation to spend: By automatically transferring money from your paycheck or bank account into your investment account, you reduce the temptation to spend that money on something else.
• Saves time and reduces stress: Automating your investments saves you time by eliminating the need to manually transfer and invest your money. It also reduces the stress associated with constantly monitoring the market and making investment decisions.
• Helps maintain a long-term perspective: Automatic investing encourages a long-term perspective by removing the emotional factor from investment decisions. It prevents you from making impulsive decisions based on short-term market fluctuations, helping you stick to your investment plan through ups and downs.
• Makes investing easier: Setting up automatic investments is a simple process that only needs to be done once. This convenience makes it more likely that you will actually follow through with investing, even if you lack the discipline to do so manually.
• Potential for compounded returns: By investing regularly, you can benefit from the power of compounding returns. This means that your investments will generate returns on top of the returns you've already earned, leading to faster growth of your portfolio over time.
• Reduces impact of volatility: Dollar-cost averaging, a strategy used in automatic investing, helps reduce the impact of market volatility. By investing a fixed amount at regular intervals, you lower the risk of investing a large sum right before a market downturn.

To set up automatic investing with Fidelity, you can follow these steps:

• Prerequisite: Before setting up automatic investing, ensure you own at least one mutual fund. If not, make a minimum investment in a mutual fund of your choice.
• Login: Log in to your Fidelity account and go to https://www.fidelity.com/cash-management/automatic-investments.
• Set up automatic investments: Click the "Set up Automatic Investments" button, which will take you to a page listing your accounts.
• Choose an account: Click on the link for the account you wish to set up automatic investing for. A dialog will appear with several options:

• Transfer funds from an external bank account.
• Transfer and then invest funds from an external bank account.
• Invest funds from the core position (for funds already in your investment account).

• Transfer and invest: For this example, we'll choose option 2. You will be taken to a page to configure your auto-investing schedule, including the amount, frequency, and timing of transfers.
• Select a bank account: If you want to transfer funds from a new bank account, click on "Set up Electronic Funds Transfer" and follow the instructions.
• Transfer from and to: Choose the bank you wish to transfer money from and select where the money will be transferred to:

• Your Brokerage Core Account (where it will sit until manually invested)
• Mutual funds you own (where it will be automatically invested)

• Enter amount and schedule: Decide on the amount you want to automatically transfer and invest, and customize your auto-investing schedule (frequency and timing).
• Review and finalize: Review your schedule and make any necessary changes before finalizing it.

Congratulations! You've now set up your automatic investments with Fidelity. This will help you address the lack of discipline by ensuring your investments are made consistently and systematically, without requiring constant manual effort and decision-making.

Setting up automatic investments

Understand Automated Investing:

Before setting up automatic investments, it's important to understand the concept of automated investing and its benefits. Automated investing involves contributing money to your investment accounts regularly through direct deposits from your paycheck or recurring bank transfers. This establishes a routine of saving and investing without any extra effort. It helps keep your savings plan on track, reduces the temptation to spend, and allows you to focus on other financial goals.

Create a Financial Plan:

Before automating your investments, it's a good idea to start with a financial plan. This plan doesn't need to be extremely detailed, but it should give you an understanding of how much you can save and how you should invest that money to reach your goals. You may consider seeking professional advice to create a comprehensive financial plan.

Login to Your Fidelity Account:

To set up automatic investments, you'll need to access your Fidelity account. Log in to your account on the Fidelity website or through the Fidelity Mobile® app.

Navigate to the "Automatic Investments" Section:

Once you're logged in, find and click on the "Set up Automatic Investments" button. This should take you to a page where you can see a list of your accounts.

Choose the Account for Automatic Investing:

From the list of accounts, select the specific account for which you want to set up automatic investing. This could be a brokerage account, a cash management account, a retirement account, or a health savings account.

Set Up an Automatic Transfer or Investment:

After selecting the desired account, you'll see several options:

• Transfer funds from an external bank account: This option transfers money from your bank to your investment account but doesn't invest it automatically.
• Transfer and then invest funds from an external bank account: This option transfers money from your bank and automatically invests it in a mutual fund.
• Invest funds from the core position: This option automatically invests funds already in your investment account.

Configure Your Auto-Investing Schedule:

After choosing your preferred option, you'll be directed to a page where you can set up your auto-investing schedule. Here, you can select the frequency (daily, weekly, monthly, or quarterly) and the amount you want to automatically transfer and invest.

Finalize Your Schedule:

Once you've set up your schedule, review it carefully and finalize it. After finalization, you can still make changes, review, edit, or skip specific months if needed.

By following these steps, you'll successfully set up automatic investments with Fidelity, allowing you to make investing a seamless and stress-free part of your financial journey.

Frequently asked questions