Maximizing Fidelity Netbenefits: A Guide To Smart Investing

Fidelity Investments is a well-rounded brokerage that offers a range of investment options, including stocks, bonds, mutual funds, ETFs, and more. With no commissions on stock or ETF trades and a selection of no-expense-ratio index funds, Fidelity is a great choice for both beginner and active investors. In addition, they provide various resources and tools to help investors manage their investments and plan for their financial goals, such as retirement, saving for a new home, or college education. One of the key features of Fidelity is its focus on customer support, with 24/7 phone, chat, and email assistance, as well as a network of over 200 branches for in-person advice. The company also offers a range of accounts, including standard brokerage accounts, IRAs, and Roth IRAs, providing flexibility for investors with different needs.

Fidelity's range of investment accounts

Fidelity offers a wide range of investment accounts to help you reach your financial goals. These include:

Brokerage Accounts

The Fidelity Account® is a multi-feature trading and investing account that allows you to select from a broad range of investment choices, including stocks, bonds, ETFs, options, and mutual funds. You can invest with as little as $1, and there are no account fees or minimums to open an account.

Retirement Accounts

Fidelity offers several retirement accounts, including the Traditional IRA, Roth IRA, Rollover IRA, and Inherited IRA. These accounts offer tax-advantaged growth and flexible investment options. The Roth IRA, for example, allows you to contribute money you've already paid taxes on, and then withdraw it tax-free in retirement. The Traditional IRA can help you save for retirement independently from any workplace accounts, like 401(k)s or 403(b)s.

Cash Management Accounts

Fidelity's cash management account offers the features of a traditional checking account, but with more competitive rates on your cash. It includes checkwriting, bill pay, a debit card, and the choice of a money market mutual fund or an FDIC-insured deposit sweep option for uninvested cash. There are no account fees or minimums.

Health Savings Accounts (HSAs)

An HSA is a tax-advantaged savings account designed for eligible medical expenses. Contributions are tax-deductible, withdrawals for qualified medical expenses are tax-free, and any investment growth is tax-free if used for qualified medical expenses.

529 Plan

The 529 Plan is a flexible and tax-advantaged investment plan for future education expenses. It covers more than just college tuition; funds can also be used for room and board, books, technology expenses, and student loan repayments.

Youth and Custodial Accounts

The Fidelity Youth® Account is a teen-owned brokerage account for 13- to 17-year-olds, which helps them save and invest their money under parental supervision. There are no subscription, account fees, or minimum balances to open the account. The Custodial Account is another option for investing for a child's future, with no account fees or minimums.

How to manage your own investments

Managing your own investments can be a rewarding endeavour, but it requires time, knowledge, and confidence. Here are some steps and considerations to help you manage your investments effectively:

Choose the Right Account

The first step is to select the appropriate account for your investment goals. Fidelity offers various account options, including retirement accounts such as a traditional IRA, Roth IRA, or rollover IRA, and general investing accounts like the Fidelity Brokerage Account. Consider your investment objectives and time horizon when choosing an account.

Fund Your Account

Once you've selected the right account, it's time to fund it. Link your bank account to your Fidelity account and transfer money as needed or set up automatic deposits to build your investment balance over time.

Select Your Investments

Choosing your investments is a crucial step. Consider your risk tolerance, timeline, and involvement level. You can invest in stocks, bonds, mutual funds, or exchange-traded funds (ETFs). Diversification is essential to manage risk, so spread your investments across different asset classes. Research and understand the risks and potential rewards associated with each investment type.

Monitor and Rebalance Your Portfolio

Regularly monitor your investments and the market conditions. Stay informed about stock and bond market performance and global economic trends. Periodically rebalance your portfolio, typically every six months, to realign it with your target asset allocation. This ensures your investments remain suitable for your financial goals.

Tax Considerations

Consider the tax implications of your investments. Certain investment strategies, such as tax-loss harvesting and strategic tax management techniques, can help you keep more of your money. Consult with tax professionals to understand the tax treatment of your investments and potential capital gains taxes.

Seek Education and Resources

Fidelity provides educational resources and tools to support your investment journey. Take advantage of these resources to learn more about investing, portfolio management, and specific investment products. This can help you make more informed decisions and increase your confidence in managing your own investments.

Remember, investing involves risk, and the value of your investments may fluctuate. It's essential to carefully consider your investment decisions and seek additional guidance if needed.

The benefits of a Fidelity Roth IRA

A Fidelity Roth IRA is a powerful way to save for retirement. It offers tax-free growth potential and tax-free withdrawals, allowing you to keep more of your money. Here are some of the key benefits of a Fidelity Roth IRA:

Tax-Free Growth and Withdrawals:

With a Roth IRA, you contribute money that has already been taxed (after-tax dollars). This means that any growth or earnings from your investments can be withdrawn tax-free in retirement, provided certain requirements are met. This can help lower your taxes in retirement.

Flexible Access to Your Money:

You can withdraw your contributions at any time, for any reason, without taxes or penalties. This gives you the flexibility to balance your long-term retirement goals with your short-term financial needs.

No Required Minimum Distributions (RMDs):

Unlike traditional IRAs, Roth IRAs do not have required minimum distributions during the lifetime of the original owner. This means you can leave your money in the account, allowing it to continue growing, or pass on more of your savings to your heirs.

Tax Flexibility in Retirement:

By contributing after-tax dollars, you get tax flexibility in retirement. You can manage your overall income tax liability by strategically choosing when and how much to withdraw from your Roth IRA and other retirement accounts.

Help Reduce or Avoid Surtaxes:

A Roth IRA can potentially help limit your exposure to the Net Investment Income Tax (NIIT). Qualified withdrawals from a Roth IRA do not count towards the modified adjusted gross income (MAGI) threshold that determines this surtax.

Hedge Against Future Tax Hikes:

While we cannot predict future tax rates, a Roth IRA can be a wise choice if you anticipate higher tax rates in the future. By locking in tax-free withdrawals now, you can protect yourself from potentially higher taxes in retirement.

A Fidelity Roth IRA offers flexibility, tax advantages, and the potential for tax-free growth, making it a powerful tool for building your retirement savings.

Transferring retirement funds

Step 1: Prepare the Necessary Documents

Before initiating the transfer, download a digital statement from your current firm. This will provide you with important account information that you may need during the transfer process. In some cases, you may need to upload a copy of this statement to complete the transfer. Additionally, if there are multiple account owners, your current firm may require all owners to sign the "Transfer Assets to Fidelity" form.

Step 2: Understand the Types of Accounts Involved

When transferring retirement funds, it's important to understand the types of accounts involved. You can transfer an Individual Retirement Account (IRA), a brokerage account, or a health savings account (HSA) to Fidelity. If you have a workplace account, such as a 401(k) or 403(b), the process is slightly different and is called a "rollover."

Step 3: Initiate the Transfer

Most transfers can be done online and typically take 3-5 business days to complete. However, some requests may take longer. You will need to submit your transfer request to Fidelity, who will then contact your current firm to request the account assets. After processing your request, your current firm will send the assets to Fidelity, who will deposit them into your selected account.

Step 4: Be Aware of Potential Taxes and Fees

In most cases, if you are moving a retirement account to a Fidelity retirement account of the same type, you will not incur taxes. Fidelity does not charge a fee for transferring assets, but your current firm may charge a fee for transferring your assets out of their institution.

Step 5: Track Your Transfer

You can track the progress of your transfer online at any time using Fidelity's Status Tracker. You will receive an email notification when your assets have been deposited into your Fidelity account. Once the transfer is complete, you will have full access to your cash and securities.

Remember to consider all your options and the applicable fees and features before transferring your retirement funds. If you have any questions or need assistance, you can always contact Fidelity's customer service or seek advice from a financial professional.

Fidelity's dedicated team of professionals

The team provides access to a dedicated advisor with a supporting team of specialists, ensuring that you receive customized planning and investment management. This service is designed to cater to your full financial picture, addressing your short- and long-term goals. Whether you're planning for retirement, saving for a new home, or building an emergency fund, they will work with you to develop a comprehensive roadmap.

Fidelity's team of advisors takes the time to understand your personal goals, risk comfort level, and financial accounts to build an investment strategy aligned with your priorities. They offer tax-smart investing strategies, aiming to reduce taxes so more of your money can remain invested. This includes using losses in your account to offset gains and exploring strategies to reduce the tax impact when you withdraw funds.

Additionally, Fidelity's dedicated professionals are easily accessible. You can connect with them by phone or video to ensure your plan stays on track. They are committed to providing personalized guidance and continuity of care, getting to know you and your portfolio to offer tailored advice.

With Fidelity's dedicated team of professionals, you can feel confident that you're receiving expert support and guidance on your financial journey.

Frequently asked questions