Maximizing Automatic Investments With Fidelity: Strategies For Success

Automating your investments with Fidelity is a great way to grow your wealth over time without the stress of constant manual intervention. Fidelity's automatic investment feature allows you to set up recurring transfers into your chosen investment accounts, helping you stay on track with your long-term financial goals. In this article, we will discuss the benefits of automating your investments with Fidelity and provide you with a step-by-step guide on how to set up automatic investments. We will also outline some potential risks to be aware of when using this feature. By the end of this article, you should feel confident in using Fidelity's automatic investment tools to increase your number of automatic investments and work towards achieving your financial aspirations.

Dollar-cost averaging

For example, if you have $5,000 to invest and are considering buying a particular stock, you could use a dollar-cost averaging approach by investing $1,000 a month for five consecutive months. This approach can help to reduce the risk of investing all your funds at a time when the stock price is relatively high or volatile. It can also help to remove the emotional element from investing, as you are not trying to time the market by making a one-off purchase. Instead, you are committing to a long-term strategy that can help to build wealth over time.

Fidelity offers a Recurring Investments feature that allows you to set up dollar-cost averaging for mutual funds, stocks, and ETFs on a weekly, bi-weekly, or monthly basis. You can set up a plan by logging into your Fidelity account, clicking on "Accounts & Trade", selecting "Account Features", and choosing "Manage" next to "Recurring Transfers".

Fidelity's online platform

Step 1: Log in to Your Fidelity Account

Accessing your account is the first step. Go to the Fidelity website and click "Log In" on the homepage. Enter your credentials, and if you're a new user, register and create your login details.

Step 2: Navigate to the 'Accounts & Trade' Tab

Once logged in, you'll see the 'Accounts & Trade' tab at the top of the main dashboard. This is your central hub for managing all your financial activities, including investment accounts, scheduled transfers, and transaction history.

Step 3: Select 'Automatic Investments'

Within the 'Accounts & Trade' section, you'll find the 'Automatic Investments' option. This is where you'll set up recurring contributions for your chosen investment accounts, including retirement accounts.

Step 4: Choose Your Investment Account

After selecting 'Automatic Investments', choose the specific account where you want to automate contributions. This could be a mutual fund, exchange-traded fund (ETF), or an individual stock account. Consider your investment goals and risk tolerance when making this decision.

Step 5: Pick Your Investment Options

Within your chosen investment account, select the investment options that align with your financial goals and risk appetite. These could include various asset classes, such as stocks, bonds, mutual funds, or ETFs.

Step 6: Set Your Investment Amount and Frequency

Decide on the amount you wish to invest and how often you want to contribute. Ensure that these choices align with your long-term financial goals and your risk tolerance. You can choose from different frequencies, such as weekly, bi-weekly, or monthly.

Step 7: Review and Confirm Your Automatic Investment Plan

Before finalising, carefully review and confirm your automatic investment plan. Check that it reflects your investment decisions and supports your financial objectives. Consider factors such as diversification, asset allocation, and risk tolerance.

Benefits of Using Fidelity's Online Platform for Automatic Investments

Using Fidelity's online platform for your automatic investments comes with several advantages:

• Consistency and Discipline: Automatic investments promote consistency and financial discipline by making regular contributions, helping you stay committed to your long-term financial goals.
• Time and Effort Savings: Automating your investments saves time and effort by streamlining the investment process. You don't need to manually manage your portfolio regularly, freeing up time for other pursuits.
• Dollar-Cost Averaging: This strategy, facilitated by automatic investments, helps smooth out market volatility. By investing a fixed amount at regular intervals, you reduce the risk of large lump-sum investments at inopportune times.
• Potential for Higher Returns: Automating investments with Fidelity can lead to higher returns by enabling better management of your portfolio, informed by market analysis and economic indicators.
• Reduced Emotional Decision-Making: Automating investments removes emotions from the equation, helping you stick to a structured investment strategy. This disciplined approach can lead to more rational and strategic investment choices.

Investment options

Fidelity offers a wide range of investment options to cater to different risk appetites and financial goals. These include stocks, mutual funds, exchange-traded funds (ETFs), bonds, and individual stocks.

When choosing between mutual funds, ETFs, and individual stocks, consider your investment goals and risk tolerance. Mutual funds offer diversification and are managed by professionals, while ETFs provide similar diversification but with lower fees by being traded on exchanges like stocks. Individual stocks allow for direct investment in specific companies.

It is important to evaluate the performance history, fees, and management style of each option to align with your financial objectives. Additionally, ensure that your chosen account supports automatic contributions for a seamless investment experience.

Fidelity's brokerage services provide seamless access to real-time market data, research tools, and educational resources to support your investment decisions.

Step 1: Log in to Your Fidelity Account

Log in to your Fidelity account using your credentials through their secure online platform. This will grant you access to various features and tools to manage your investments, such as setting up automatic contributions, monitoring portfolio performance, and adjusting your investment strategy.

Step 2: Go to the 'Accounts & Trade' Tab

Once logged in, navigate to the 'Accounts & Trade' tab, which provides a centralized hub for managing all your financial activities, including investment accounts, scheduled transfers, and transaction history.

Step 3: Select 'Automatic Investments'

Within the 'Accounts & Trade' section, locate and select the 'Automatic Investments' option to initiate recurring contributions for your chosen investment accounts, including retirement accounts.

Step 4: Choose Your Investment Account

After accessing the automatic investments feature, select the specific investment account where you want to automate contributions. This could be mutual funds, exchange-traded funds, or individual stocks.

Step 5: Select Your Investment Options

Within your chosen investment account, select the investment options that align with your financial goals and risk tolerance. These could include bonds, various asset management strategies, and opportunities for compounding returns.

Consider diversifying your portfolio by allocating your investments across different asset classes, such as stocks, bonds, and mutual funds, to reduce the impact of any one investment performing poorly.

Step 6: Set Your Investment Amount and Frequency

Specify the amount you wish to invest and the frequency of contributions, ensuring they align with your long-term financial growth objectives. This requires thoughtful consideration of the opportunities available in the investment landscape.

Step 7: Review and Confirm Your Automatic Investment Plan

Before finalizing, carefully review and confirm your automatic investment plan to ensure it reflects your investment decisions and supports your journey towards financial independence.

Consider your financial goals, assess the risk levels associated with each investment, and ensure your asset allocation is diversified to minimize risk and maximize potential returns.

Benefits of Automating Your Investments with Fidelity:

• Consistency and Discipline: Automatic investments promote consistency and financial discipline by maintaining a regular savings habit, helping individuals stay disciplined in their financial journey.
• Removes Emotional Decision-Making: Automating investments eliminates emotional decision-making, enhancing adherence to a structured investment strategy. This disciplined approach helps avoid impulsive choices driven by fear or greed.
• Saves Time and Effort: Automating investments with Fidelity saves time and effort by streamlining the investment process, allowing you to focus on asset growth and financial goals.
• Dollar-Cost Averaging: This strategy, facilitated by automatic investments, helps manage investment costs and provides structured withdrawal options. It involves investing a fixed amount at consistent intervals, reducing the impact of market volatility.
• Potential for Higher Returns: Automating investments can lead to higher returns by enabling better management of your portfolio, informed by market analysis and economic indicators.

Risks of Automatic Investments with Fidelity:

• Market Volatility: Automatic investments are exposed to market fluctuations, which can impact the value of the investment portfolio and hinder long-term savings goals.
• Potential for Losses: Automatic investments carry the risk of potential losses, especially if the portfolio is not adequately diversified or market conditions lead to reduced returns.
• Limited Control over Investment Choices: Automating investments may result in limited control over specific choices, potentially impacting the alignment with individual financial goals.
• Potential for Overlapping Investments: There is a risk of inadvertently duplicating holdings in response to evolving market updates, leading to increased risk and reduced diversification.

Setting up automatic contributions

Step 1: Log in to Your Fidelity Account

Access your account through their secure online platform by entering your username and password. If you're a new user, you may need to register and create your login credentials. Once logged in, you can explore various features and tools to manage your investments effectively.

Step 2: Go to the 'Accounts & Trade' Tab

The 'Accounts & Trade' tab is usually located prominently at the top of the main dashboard. This section provides a centralized hub for managing your investment accounts, scheduled transfers, and transaction history. You can easily view your portfolio performance, initiate transfers, and review transaction records with just a few clicks.

Step 3: Select 'Automatic Investments'

Within the 'Accounts & Trade' section, locate and select the 'Automatic Investments' option. This feature simplifies your investment journey by enabling you to set up recurring contributions to your chosen investment accounts, including retirement accounts. You can customize the frequency and amount of contributions to align with your financial objectives and risk tolerance.

Step 4: Choose Your Investment Account

After accessing the automatic investments feature, select the specific investment account where you want to automate contributions. This could include mutual funds, exchange-traded funds (ETFs), or individual stocks. Consider your investment goals and risk tolerance when making this choice. Mutual funds offer diversification and professional management, while ETFs provide lower fees and diversification. Individual stocks allow direct investment in specific companies.

Step 5: Select Your Investment Options

Within your chosen investment account, select the investment options that align with your financial goals and risk tolerance. These could include various asset classes, such as stocks, bonds, mutual funds, or different investment strategies. Evaluate the diversification offered by each option to spread risk effectively and consider the time horizon of your investments.

Step 6: Set Your Investment Amount and Frequency

Specify the amount you wish to invest and the frequency of contributions. Ensure that your choices align with your long-term financial goals and aspirations. This step requires thoughtful planning, considering the investment landscape and your unique financial situation.

Step 7: Review and Confirm Your Automatic Investment Plan

Before finalizing, carefully review and confirm your automatic investment plan to ensure it reflects your investment decisions and financial objectives. Consider factors such as dividend reinvestment, potential capital gains, and market fluctuations. Stay informed about market conditions and make adjustments as needed to optimize your investment strategy.

By following these steps, you can set up automatic contributions with Fidelity, helping you stay disciplined and consistent in working towards your financial goals.

Benefits of automating investments

Automating your investments can be a great way to grow your wealth over time. Here are some key benefits of automating your investments:

Consistency in Investing

Automating your investments encourages a systematic approach to investing, helping you stay disciplined in your financial journey. By setting up automated contributions, you establish a routine that reinforces your commitment to your long-term financial objectives. This routine can help you resist the temptation of market fluctuations and emotional decision-making.

Removes Emotional Decision-Making

Automating your investments eliminates emotional decisions driven by fear or greed, which can lead to costly mistakes. By relying on automated systems and algorithms, you can make more rational decisions, optimizing your portfolio's performance over time.

Saves Time and Effort

Fidelity and other investment platforms offer automated tools that streamline the investment process, saving you time and effort. By setting up automatic contributions and rebalancing features, your portfolio stays aligned with your financial goals, giving you more time to focus on other pursuits.

Dollar-Cost Averaging

Automating your investments is a great way to implement dollar-cost averaging, a strategy that helps smooth out market volatility. By investing a fixed amount at regular intervals, you buy more shares when prices are low and fewer when prices are high, resulting in a lower average cost per share over time.

Reduces Temptation to Spend

By automatically allocating funds to your investment portfolio, you reduce the risk of spending that money elsewhere. This ensures your investments remain consistent and helps you stay disciplined with your financial plan.

Avoids Overreactions to Market Fluctuations

Automating your investments reduces the likelihood of impulsive decisions, such as day trading, during volatile market conditions. It also takes the guesswork out of timing the market, helping you stay committed to your long-term investment strategy.

Frequently asked questions