Strategies To Develop Fidelity Investments: A Comprehensive Guide

Investing can be a complicated process, but it doesn't have to be. Fidelity offers a range of investment options, from brokerage accounts to retirement plans, and provides resources to help investors make informed decisions. Here are some steps to develop your investments with Fidelity:

1. Figure out your investment goals: Are you investing for retirement, saving for a big purchase, or something else? Knowing your goals will help you choose the right account and investment options.

2. Choose an account type: Fidelity offers various accounts such as brokerage accounts, 401(k) plans, IRAs, 529 plans, and more. Each has its own pros, cons, and tax implications, so it's important to understand which one aligns with your goals.

3. Open and fund your account: Once you've chosen an account type, it's time to open and fund it. You can link your bank account to your Fidelity account and transfer money as needed.

4. Select your investments: Fidelity offers a wide range of investment options, including stocks, bonds, mutual funds, ETFs, and more. Consider your risk tolerance, timeline, and desired level of involvement when choosing investments.

5. Diversify your portfolio: Diversification is important to manage risk. Spread your investments across different types of assets and within each asset class to balance your portfolio.

6. Monitor and rebalance: Regularly check in on your investments to ensure they're on track with your goals. Rebalance your portfolio as needed to maintain your desired allocation.

7. Utilize resources and seek advice: Fidelity offers extensive educational resources and research tools to help investors make informed decisions. You can also consider working with a robo-advisor or a financial professional for more personalized guidance.

By following these steps and utilizing the resources available through Fidelity, you can develop your investments effectively and work towards achieving your financial goals.

Choose an account type

Brokerage Account

A brokerage account is a standard-issue investment account that offers flexibility. Anyone aged 18 or older can open one, and children aged 13 to 17 can start learning about investing with a Fidelity Youth® Account. There are no restrictions on how much money you can add to the account, and you can generally withdraw any cash whenever you want. You will also have access to a wide range of investment options. However, a brokerage account is a taxable account, which means you will have to pay taxes on any realised investment profits every year. Fidelity charges $0 account fees and has no minimums for opening or maintaining a brokerage account.

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A 401(k) is an employer-sponsored plan for investing for retirement. It offers tax-advantaged investment growth potential with relatively high contribution limits. You can contribute to the account pre-tax and generally don't pay any taxes while your money sits in the account. Many employers will also match your contributions, encouraging you to invest. However, there are rules to follow on how much you can contribute and when and how you can take money out. You may also be limited in what investments you can buy.

Individual Retirement Account (IRA)

An IRA is an account for retirement that you can open and invest in on your own. There are different types of IRAs, but traditional IRAs offer similar tax benefits to 401(k)s. You can contribute whenever you feel like it, and contributions for the previous calendar year can be made up to the tax filing deadline. You may also have more investment choices and can typically trade individual stocks. However, there are rules and restrictions on who is eligible to receive a tax deduction, how much you can contribute each year, and how and when you can take money out.

Fund the account

Funding the account

Once you have chosen the account type that is right for you, it is time to fund it. You can easily link your bank account(s) to your Fidelity account(s) and then transfer money at any time or set up automatic deposits.

If you are opening a 401(k) account, you will be contributing through payroll deductions, meaning the money is taken out of your paycheck automatically. You decide how much of your pay to contribute. If your employer offers matching contributions, it is recommended that you invest at least enough to capture the full amount of the match. For example, if your employer offers a dollar-for-dollar match up to 3%, you would contribute 3% to take full advantage.

If you are opening an IRA or brokerage account, you can start by depositing a chunk of money and then add to that when you are ready. If possible, making regular, recurring contributions can help you take advantage of dollar-cost averaging. This is a strategy where you invest your money in equal portions at regular intervals. There are no minimums to open an IRA or brokerage account with Fidelity.

There is no magic number for how much you need to start investing or how much you should add each month. The right number will vary depending on your income, budget, and other financial priorities. However, starting small is better than not starting at all. Investing a little bit every month and gradually increasing that amount over time is a fine way to go.

Fidelity's zero-fee accounts

Fidelity charges \$0 account fees and has no minimums for opening or maintaining a brokerage account. There are also no fees or minimums to open a retail brokerage account, helping you to spend and save smarter.

Choose your investments

Once you have set up your account, you can start to choose your investments. This is the step that tends to trip people up. It can feel like other people know some secret to picking investments—like there's a trick that can help you choose only the best ones. But the truth is, there isn't.

Investing is actually a lot like creating a healthy diet. Most people should focus on getting a broad range of common-sense investment types rather than placing all their bets on a small number of "high-promise" investments.

• Individual stocks and bonds: This is the most complicated and labor-intensive way, but it's what many people think of when they hear "investing". If you want to go this route, you'll need to learn about researching stocks, building a diversified portfolio, and more. It's doable, but it can take a lot of time to build your portfolio.
• Mutual funds or ETFs: Mutual funds and ETFs pool together money from many investors to purchase a collection of stocks, bonds, or other securities. You can use them like building blocks, putting a few together to create a portfolio. Or, you can buy an all-in-one fund, which is an easy-to-manage diversified portfolio in a single fund. If you're investing in a 401(k) or IRA, one option to consider is a target date fund—an all-in-one professionally managed fund that's specifically designed with a target retirement date in mind.
• Hire a professional manager: If you're getting stuck, consider getting help. While this may sound like it's only an option for the wealthy, there are low-cost options that can meet your needs too. For example, robo advisors like Fidelity Go® can offer low-to-no-cost professional management because the day-to-day money management is handled by computers rather than live humans.

And remember, there's nothing wrong with mixing and matching. Whatever options you're considering, just be sure also to consider any fees, expenses, or commissions.

Diversify your investments

Diversifying your investments is a crucial step in building a robust investment portfolio. Here are some essential tips to help you diversify your investments effectively:

• Spread your investments across different asset classes: Diversification is not limited to stocks and bonds. Explore other asset classes such as mutual funds, exchange-traded funds (ETFs), cryptocurrencies, options, and fixed-income products. Fidelity offers a wide range of investment options, including stocks, ETFs, mutual funds, certificates of deposit (CDs), and more.
• Diversify within each asset class: Don't put all your eggs in one basket, even within an asset class. For example, if you invest in stocks, allocate your funds across various sectors and industries. If you invest in bonds, consider a mix of government and corporate bonds with different maturity dates.
• Consider target-date funds: Target-date funds, also known as "glide-path funds," automatically adjust their asset allocation based on a predetermined schedule. They can help you diversify your investments and reduce the risk of being overly exposed to a particular asset class.
• Utilize mutual funds and ETFs: Mutual funds and ETFs are managed by professionals and provide instant diversification. Mutual funds are actively managed and may have higher fees, while ETFs are traded throughout the day and usually have no minimum investment requirement. Fidelity offers thousands of mutual funds and ETFs to choose from.
• Review and rebalance your portfolio periodically: Regularly review your investments to ensure they align with your risk tolerance, timeline, and goals. Rebalance your portfolio as needed to maintain your desired level of diversification.
• Consider a robo-advisor: If you want a more hands-off approach, consider using a robo-advisor like Fidelity Go®. These services use algorithms to create and manage an investment portfolio based on your goals, timeline, and risk tolerance.
• Don't forget about tax-advantaged accounts: Take advantage of tax-efficient investment vehicles such as Individual Retirement Accounts (IRAs), 401(k) plans, and health savings accounts (HSAs). These accounts offer tax benefits that can boost your investment returns over time.
• Educate yourself: Diversification is a complex topic, and it's essential to understand the risks and rewards of different investment options. Stay informed about market trends, research investment strategies, and seek guidance from reliable sources like Fidelity's educational resources.

Remember, diversification does not guarantee profit or protect against losses. It is a risk management strategy that can help you build a more resilient investment portfolio.

Buy the investments

Now that you've chosen your investments, it's time to buy them. Here are the steps to follow:

• Select an account to trade in: Choose the investment account you want to trade in. This could be a brokerage account, IRA, 401(k), or other types of accounts.
• Choose an investment: Decide on the specific investment you want to buy, such as stocks, bonds, mutual funds, or ETFs.
• Select an order type: Determine the type of order you want to place, such as a market order, limit order, or stop order.
• Choose how long your order is active: You can choose between different durations for your order, such as "Day" or "Good 'til canceled (GTC)".
• Pick a quantity: Decide on the amount you want to invest, whether it's a dollar amount, a certain number of shares, or a fraction of a share.
• Select an action: Specify whether you want to buy or sell the investment.
• Place the order: Review the details of your order and place it through your brokerage platform.

Remember to consider your investment goals, risk tolerance, timeline, and desired level of involvement when choosing your investments. Diversification is also important to manage your risk. It's a good idea to review your investments regularly and make adjustments as needed to stay aligned with your goals.

Frequently asked questions