Invest Wisely: Strategies For Fidelity Funds

Investing with Fidelity can be a great way to grow your net worth and build a more secure financial future for yourself and your family. Fidelity offers a range of investment options, from mutual funds and ETFs to individual stocks and bonds, so you can find the right mix of investments to achieve your strategic financial goals.

Before you start investing with Fidelity, it's important to understand the different types of accounts available, such as brokerage accounts, 401(k)s, and IRAs, and choose the one that best suits your needs and goals. You should also consider how much money you want to invest and what you want to invest it in.

Once you've decided on your investment goals and chosen an account type, you can open an account with Fidelity and start funding it. You can then choose your specific investments, keeping in mind your risk tolerance, timeline, and desired level of involvement.

Fidelity offers a wide range of mutual funds, including stock, bond, money market, asset allocation, and index funds, as well as various types of accounts to suit different investment goals. You can also automate your investing by setting up regular transfers into your investment account, making it easier to save and invest consistently.

By taking the time to understand your investment options and choosing the right approach for your needs, you can make the most of investing with Fidelity and work towards achieving your financial goals.

Choosing the right account type for your goals

Brokerage Account

A brokerage account is a standard investment account that offers flexibility. Anyone aged 18 or older can open one, and you can add as much money as you want whenever you want. This type of account typically provides access to a wide range of investment options, including stocks, bonds, ETFs, options, and mutual funds. It is also generally a taxable account, which means you may have to pay taxes on any realised investment profits. A brokerage account is commonly used for investing and trading a full range of investment options, either for specific goals or for building wealth. Fidelity offers a low-cost brokerage account called The Fidelity Account®, which provides access to a wide range of investment choices with $0 commissions for online US stock, ETF, and option trades.

K)

A 401(k) is an employer-sponsored plan for retirement investing. It offers tax-advantaged investment growth potential with relatively high contribution limits. You can contribute pre-tax, and taxes are usually paid only when you make withdrawals. Some employers may also match your contributions up to a certain amount. However, there are rules and restrictions on contribution amounts, and you may have limited investment choices.

Individual Retirement Account (IRA)

An IRA is a retirement account that you can open and invest in on your own, outside of work. Traditional IRAs offer similar tax benefits to 401(k)s, with some differences. You may be able to get a tax deduction for the year of your contribution, and you have more flexibility in terms of contribution timing. You may also have more investment choices and the ability to trade individual stocks. However, there are rules and restrictions on who is eligible for tax deductions, contribution limits, and withdrawals. Roth IRAs, a specific type of IRA, may be a good choice for investors at the beginning of their careers due to their lower income and tax bracket.

529 Account

A 529 account is a flexible, tax-advantaged option specifically designed for education savings. It allows you to save for qualified educational expenses at schools nationwide, and there are no account minimums or annual fees.

Fidelity Youth® Account

The Fidelity Youth® Account is designed for teens aged 13 to 17 to learn about investing and manage their own account with parental oversight. It offers a way for young people to get an early start on investing and provides an opportunity for financial education.

How to open and fund your account

Opening a Fidelity account is easy and can be done in minutes.

Step 1: Figure out what you're investing for

Firstly, it's important to understand your investment goals. Many people start by investing for retirement, but you might also be investing for a big goal, such as a house deposit, or for a child's education.

Step 2: Choose an account type

The type of account you choose will depend on your investment goals. Fidelity offers a range of account types, including:

• Brokerage account: a standard-issue investment account with no minimum age (over 18s only) or contribution limits, but taxable.
• 401(k): an employer-sponsored retirement plan with tax benefits and potentially matched contributions.
• Individual retirement account (IRA): a tax-beneficial retirement account that you can open and manage yourself.

Step 3: Open the account and put money in it

To open a 401(k), you'll do so through your employer. For an IRA or brokerage account, you'll need to choose a financial institution, such as Fidelity.

Funding your account is simple and can be done via electronic funds transfer from your bank account. With a 401(k), contributions are made through payroll deductions, while with an IRA or brokerage account, you can start with a lump sum and then add to it when you're ready.

Step 4: Pick investments

You can choose from a range of investment types, including individual stocks and bonds, mutual funds or ETFs, or you can hire a professional manager.

Step 5: Buy the investments

For stocks, mutual funds, and ETFs, you'll generally need the investment's ticker symbol to buy. With a 401(k), your money will be invested automatically, but with other accounts, you'll need to set up auto-investing capabilities.

Step 6: Relax and keep tabs on your investments

Once you've made your investments, try not to obsess over short-term fluctuations—investments tend to bounce around in the short term. That said, it's important to periodically check in on your plan and make any necessary adjustments.

Picking investments

There are three basic methods for picking 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 of course, plenty of people end up deciding to use some mix of those options—like investing in funds with their retirement money but perhaps also picking individual stocks with a small portion of their money. There's nothing wrong with mixing and matching. Whatever options you're considering, just be sure also to consider any fees, expenses, or commissions.

Fidelity's Mutual Funds

Fidelity offers over 200 mutual funds, including stock, bond, money market, asset allocation, and index mutual funds. Fidelity's FundsNetwork allows you to invest in mutual funds from hundreds of fund companies outside of Fidelity, including many available with no transaction fees.

Other Investment Options

Fidelity also offers a wide range of other investment options, including:

• International Equity: Tap into the growth potential in other parts of the world and lower the volatility of your profile through diversification.
• Sector Funds: Tactical investment approaches, such as sector rotation strategies, more precise asset allocation, and greater diversification of your portfolio.
• Fixed Income Funds: Potential for capital preservation, depending on the fund.
• Index Funds: Generally lower management fees, potentially more tax-efficient, and reduced portfolio turnover.
• Money Market Funds: Short maturities and minimal credit risk. Municipal funds potentially offer tax-exempt income for non-retirement accounts.

Buying the investments

Once you have chosen your investments, you will need to buy them. This is a relatively straightforward process, but it is important to understand the steps involved.

Firstly, you will need to select the account in which you want to buy the fund. If you have multiple eligible brokerage or mutual fund accounts, you will need to choose the specific account.

Next, you will need to enter a valid mutual fund symbol and specify the dollar amount you wish to invest. It is important to note that the total dollar amount for the trade may be higher after any applicable fees and commissions are added. Therefore, you should carefully review your order details before placing the order.

If you are buying a mutual fund, you will also need to decide whether to buy shares or a dollar amount. You can choose to buy a specific number of shares or invest a specific dollar amount.

It is also worth noting that when you are buying a mutual fund, the price you pay depends on whether the fund has a front-end load or not. If the fund does not have a front-end load, you will pay the next available Net Asset Value (NAV). If the fund has a front-end load, you will pay the next available Public Offering Price (POP).

For stocks, mutual funds, and ETFs, you will generally need to look up the investment's ticker symbol, which is a string of 1 to 5 letters unique to that investment.

If you are investing in a 401(k), the process may be slightly different. You will often set up your investment choices when setting your regular contribution amount, and your money will be invested in the choices you have selected automatically, corresponding with your pay cycle. It is important to note that fund exchanges and payroll elections are two separate steps, and changing one will not automatically change the other.

Additionally, with a 401(k), the lineup of available investment options is selected by the plan sponsor, which can make the process less overwhelming. Once you make your payroll deduction election, your funds will be automatically invested until you decide to change it.

Finally, remember that you can automate your investments by setting up regular transfers into your investment account. This can be done through direct deposit from your paycheck or recurring bank transfers. This can help ensure that you save and invest regularly without having to constantly make those decisions.

Monitoring your investments

Regular Portfolio Check-ups

Fidelity recommends checking your investment plan periodically, especially if your goals or situation change, or after sharp market moves. A portfolio check-up involves evaluating whether your investments are still in line with your goals, investment horizon, financial situation, and risk tolerance. This includes reviewing your asset mix of stocks, bonds, mutual funds, and exchange-traded funds (ETFs) to ensure they match your risk tolerance and financial goals. Set a date for your next portfolio review within a year or as soon as one month to keep your finances on track.

Trading Dashboard

Fidelity's Trading Dashboard provides a holistic view of your current positions, orders, and alerts. You can easily track each trade through its various stages, from buying to selling to pending and closing. The dashboard also offers real-time quotes, charts, news, and events to help you make informed investment decisions. You can set custom alerts to stay informed about market fluctuations and make timely investment choices.

Planning & Guidance Center

Fidelity's Planning & Guidance Center offers tools to help you review your current investment strategy and ensure it aligns with your financial goals. You can evaluate different investing strategies and explore potential changes to understand their impact. The Guided Portfolio Summary provides an in-depth analysis of your current portfolio, helping you identify areas that may need adjustments.

Mutual Fund Evaluator and Screeners

Fidelity provides a Mutual Fund Evaluator tool that allows you to search and evaluate mutual funds according to your specific criteria. You can also utilize their prebuilt and custom screeners to generate trading ideas for exchange-traded products (ETPs) and options. These tools enable you to research and compare investment options to make informed decisions.

Bond Ladder Tool

The Bond Ladder Tool assists in creating a consistent income stream by investing in different bonds with staggered maturity dates. This tool can help you diversify your bond investments and manage interest rate risk.

Remember, investing involves risk, and the value of your investments may fluctuate. Regular monitoring and evaluation of your investment portfolio can help you stay aligned with your financial goals and make any necessary adjustments.

Frequently asked questions