Fidelity Investments: A Guide To Getting Started

Fidelity Investments is an extensive platform that offers a wide range of investment options. The first step to using Fidelity Investments is to create an account. Fidelity offers different types of accounts, including brokerage accounts, 401(k) plans, and individual retirement accounts (IRAs). These accounts have different features, pros, and cons, so it's important to choose the one that aligns with your investment goals and preferences.

Once you've selected the appropriate account type, the next step is to fund it. You can link your bank account to your Fidelity account and transfer money or set up automatic deposits. After that, you can start choosing your investments. Fidelity offers various investment options, such as individual stocks, bonds, exchange-traded funds (ETFs), and mutual funds. It's crucial to consider your risk tolerance, time horizon, and investment goals when selecting investments.

Fidelity also provides resources and tools to help you make informed decisions, such as screeners, research tools, and trading platforms. Additionally, they emphasize the importance of regularly reviewing and adjusting your investments as your life circumstances and goals evolve.

It's worth noting that investing involves risk, and it's essential to understand these risks before making any investment decisions. Overall, Fidelity Investments offers a comprehensive platform for individuals looking to invest and provides the necessary tools and resources to help them along their investment journey.

Choosing an account type

The type of account you choose will depend on your investment goals. Here are some of the most common account types offered by Fidelity:

Brokerage Account

Pros: Flexibility. Anyone aged 18 or older can open an account. You can add as much money as you want, whenever you want, and choose from a wide range of investment options. Children aged 13-17 can also start learning about investing with a Fidelity Youth® Account.

Cons: Taxes. Brokerage accounts are taxable, meaning you have to pay taxes on any realised investment profits.

When to consider: Brokerage accounts are commonly used for investing and trading a full range of investment options, either for specific goals or for building wealth. While it generally makes more sense to start with a retirement account, there's no harm in opening a brokerage account as well, especially as Fidelity charges no account fees and has no minimums for opening or maintaining one.

K)

Pros: Tax benefits and potentially free money. 401(k) plans offer tax-advantaged investment growth potential and relatively high contribution limits. You can contribute pre-tax, and only pay income taxes when you make withdrawals. Many employers will also match your contributions, and it's easy to set up payroll deductions.

Cons: Rules and restrictions. There are rules on contribution limits, and strict rules on withdrawals. You may also be limited in the investments you can choose.

When to consider: For most people, the benefits outweigh the drawbacks. If your employer offers a 401(k) or similar account, it's worth investing in.

Individual Retirement Account (IRA)

Pros: Tax benefits and flexibility. IRAs come with similar tax benefits to 401(k)s, and you can contribute whenever you like. You may also have more investment choices and control.

Cons: Rules and restrictions. There are rules and restrictions on who is eligible to receive a tax deduction, contribution limits, and withdrawals.

When to consider: An IRA may be a good choice if you don't have access to a 401(k) or similar option at work. A traditional IRA may be preferable if you expect to be in a lower tax bracket when you retire.

Funding the account

Funding your Fidelity account is a straightforward process, with several options available to suit your preferences. Here's a comprehensive guide to help you navigate the process of funding your account.

Online Transfer from External Bank Account

One of the most common and convenient ways to fund your Fidelity account is through online transfers from your external bank account. This method allows for quick and seamless deposits into your brokerage account, enabling efficient management of your investments. To get started, link your external bank account to your Fidelity account to facilitate easy and secure fund transfers without the hassle of physical checks or bank visits. Verify your external account, set up the transfer details, and authorise the transaction securely. This approach saves time, reduces errors, and ensures prompt availability of funds for investment purposes.

Direct Deposit from Employer

Setting up direct deposits from your employer is another excellent way to fund your Fidelity account regularly. This method ensures a consistent flow of funds into your account, automatically topping up your balance for your investment needs. Direct deposits eliminate manual transfers or physical checks, making the process seamless and hassle-free. You can rely on the reliability of automatic transactions, freeing up your time for other financial tasks. Additionally, you can stick to your long-term financial goals without worrying about missing contributions or dealing with delayed payments.

Mobile Check Deposit

Mobile check deposit offers a convenient option for replenishing your Fidelity balance on the go. With this method, you can add funds to your account by taking a clear picture of the front and back of your endorsed check using the Fidelity mobile app. The app will guide you through the straightforward process, allowing you to verify the image quality before submitting to ensure a seamless transaction. This feature eliminates the need to visit a physical bank branch or ATM, providing added flexibility and saving you time in managing your finances.

Deposit by Mail

Deposit by mail is a traditional yet reliable method for funding your Fidelity investment account. To use this method, complete a deposit slip, including essential details such as your account number and the amount you wish to deposit. Enclose the deposit slip along with a physical check issued in favour of Fidelity Investments, and mail it to the designated address provided by Fidelity. This method adheres to strict security protocols to ensure the safety of your transaction and the prompt processing of your funds.

Electronic Funds Transfer (EFT)

Electronic Funds Transfer (EFT) is a popular choice for its convenience and quick processing time. With EFT, you can transfer funds electronically between your bank account and Fidelity account, streamlining the transaction process and enhancing fund availability. This method eliminates the need for physical checks or cash deposits, saving time and improving overall convenience. Funds transferred via EFT are typically available within one to three business days.

Wire Transfer

Wire transfers offer a fast and direct way to deposit funds into your Fidelity account. This method is ideal for larger sums that require immediate availability. To initiate a wire transfer, log in to your Fidelity account online or contact customer service for assistance. Ensure you have the correct routing number and financial institution details for a seamless transfer. Bank wires typically process on the same day, and your bank may charge a fee to send the wire, but Fidelity does not charge a fee to receive it.

Automatic Investment Plan (AIP)

The Automatic Investment Plan (AIP) is a useful feature that enables you to set up regular contributions to your Fidelity account, promoting disciplined investing habits. By automating your investment contributions, you can take advantage of dollar-cost averaging, investing a fixed amount regularly regardless of market fluctuations. This strategy can potentially enhance your portfolio's growth potential over time.

Third-Party Payment Apps

Fidelity also allows you to connect your account to various payment apps, such as Venmo or PayPal, offering an easy, secure, and private way to transfer money into your account or send money to others.

Remember to review the transaction details carefully before confirming any transfers or deposits to avoid discrepancies. Each method has its unique benefits, so choose the one that best aligns with your financial goals and investment strategy.

Picking investments

Define your investment goals

Start by asking yourself what you are investing for. Are you investing for retirement, a specific financial goal, or simply to grow your wealth over time? Knowing your investment goals will help you choose the right types of accounts and investments.

Choose an account type

The type of account you choose will depend on your investment goals and your personal situation. Here are a few options to consider:

• Brokerage account: This is a standard investment account that offers flexibility, as anyone over the age of 18 can open one and contribute as much money as they want at any time. However, it is a taxable account, which means you will have to pay taxes on any realised investment profits.
• 401(k): This is an employer-sponsored retirement plan that offers tax benefits and sometimes even matching contributions from your employer. However, there are rules and restrictions on contributions and withdrawals.
• Individual retirement account (IRA): This is another type of retirement account that can be opened and managed by the individual. It offers tax benefits similar to a 401(k) and provides more flexibility in terms of contribution timing.

Pick your investments

Once you have opened and funded your chosen account, it's time to select your investments. Here are some common investment options to consider:

• Stocks: When you buy a stock, you are purchasing a small stake in a specific company. Stock prices fluctuate based on various factors, including company performance and news. Investing in stocks can be rewarding, but it is also considered riskier than other options. It is important to do your research and diversify your portfolio to manage risk.
• Bonds: Investing in bonds is like lending money to a company or government, which agrees to pay you back with interest. Bonds are typically considered lower-risk compared to stocks and are assigned grades to help you understand the default risk.
• Mutual funds: Mutual funds pool money from multiple investors to purchase a collection of stocks, bonds, or other investments. They are managed by professionals and provide a diversified investment strategy.
• Exchange-traded funds (ETFs): ETFs are similar to mutual funds but can be bought and sold throughout the trading day. They provide exposure to a group of securities, such as stocks or bonds, and are considered less risky than individual stocks due to diversification.

Buy your investments

After deciding what to invest in, use your cash or the money in your default money market account to purchase your chosen investments. Remember that your risk tolerance, time horizon, and goals may change over time, so don't be afraid to adjust your investment plan as needed.

Review and adjust

Investing is an ongoing process, and it's important to regularly review your investments to ensure they still align with your financial goals and risk tolerance. As your life changes, your investments may need to change as well.

Buying investments

Step 1: Pick your investments

Before you start buying investments, you need to decide what you want to invest in. Fidelity offers a wide range of investment options, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs). You can also invest in cryptocurrencies like Bitcoin, Ethereum, and Litecoin.

When deciding what to invest in, consider your investment goals, risk tolerance, time horizon, and tax situation. Do your research and understand the risks involved. Diversification is important to manage your risk—spread your money across different types of investments.

Step 2: Choose an investment account

The type of investment account you choose will depend on your goals. If you're saving for retirement, consider a 401(k), IRA (Individual Retirement Account), or Roth IRA. These accounts offer tax benefits and are specifically designed for retirement savings.

For general investing and trading, or if you're investing for a big goal like buying a house, a Fidelity Brokerage Account is a good option. This type of account offers flexibility and a wide range of investment options.

Step 3: Fund your account

Once you've chosen your investment account, it's time to fund it. You can link your bank account to your Fidelity account and transfer money anytime or set up automatic deposits.

Step 4: Place your trades

When you're ready to buy your chosen investments, you can use Fidelity's trading platforms, Fidelity.com or Active Trader Pro. These platforms offer various tools and resources to help you place trades, including screeners, research, and strategy-testing tools.

Consider the type of order you want to use when placing trades, such as market orders, stop orders, or limit orders. You can also use a broker that offers trading capabilities that align with your needs.

Step 5: Monitor your investments

It's important to regularly monitor your investments to ensure they align with your goals and risk tolerance. Fidelity recommends checking your investment mix at least once a year or when your financial circumstances change.

Use tools like watchlists, alerts, and trading platforms to help you monitor your investments and make adjustments as needed.

Remember that investing involves risk, and you may lose money. Always do your research and understand the risks before buying any investments.

Monitoring investments

Monitoring your investments is an important part of investing. Here are some ways to monitor your investments using Fidelity:

Use Fidelity's Tools

Fidelity offers a range of tools to help you monitor your investments. The Full View feature, for example, allows you to track your financial information, including income and expenses, with improved, automated budget tools. You can also personalise your views and navigate intuitively.

Review Your Portfolio Summary

Fidelity allows you to review your portfolio summary, including your positions, balances, performance, and more. This can help you keep a pulse on your account and make informed decisions.

Set Price Alerts

Setting price alerts can help you stay on top of your investments and make timely decisions.

Utilise Fidelity's Learning Center

Fidelity's Learning Center offers educational resources to help you continue your financial education and make more informed investment decisions.

Work With a Financial Professional

If you feel you need guidance, you can work with a financial professional through your retirement plan at work or with a firm like Fidelity. They can help you periodically check in on your investment plan and make any necessary adjustments.

Fidelity Go

Fidelity Go is Fidelity's robo-advisor service, which offers automated, low-cost investing. It monitors the markets and automatically rebalances your portfolio to keep you on track. For balances under $25,000, there is no advisory fee, and for balances of $25,000 or more, the advisory fee is 0.35% per year.

Stay Focused on the Long-Term Goals

While it's important to monitor your investments, try not to get too caught up in the short-term fluctuations. Remember to stay focused on your long-term investing goals and your total portfolio's performance.

Frequently asked questions