Fidelity's Investment Confusion: Why Am I Already Invested?

Fidelity is a well-rounded brokerage that offers investment services, including mutual funds and index trackers (ETFs). They provide a range of investment accounts, such as brokerage accounts, 401(k) plans, and individual retirement accounts (IRAs), each with its own advantages and disadvantages in terms of flexibility, taxes, and rules. Fidelity also offers automated investing options, where individuals can contribute regularly to their investment accounts through direct deposits or recurring transfers. The company has received numerous awards for its services, including being rated the #1 Overall Broker by StockBrokers.com for three consecutive years.

You already have a 401(k) account with Fidelity

If you already have a 401(k) account with Fidelity, it means you are already taking steps to save for your retirement. A 401(k) is a retirement savings plan that lets you invest a part of each paycheck before taxes are deducted. It is an employer-sponsored plan, and many companies offer them to encourage employees to save for retirement.

The benefit of a 401(k) is that it gives you the ability to invest for retirement, which gives your money the chance to benefit from compounding and the potential to grow over time. Additionally, 401(k)s offer tax advantages. Pre-tax contributions to a 401(k) are not taxed until you begin withdrawals in retirement. Some employers also offer a second type of 401(k) called a Roth 401(k), in which you invest after-tax money, and don't pay income taxes on your withdrawals in retirement.

It is recommended that you save at least 15% of your pre-tax income each year for retirement, including any employer contributions. If your employer offers a 401(k) match, it is a good idea to contribute at least enough to get the full benefit of this. Generally, companies will use a formula, such as putting in 50 cents or $1 for every dollar you contribute, up to a certain percentage of your salary.

It is also important to keep track of your 401(k)s, especially if you work for multiple employers throughout your career. You have several options for what to do with an old 401(k), including keeping the money where it is, rolling it over to an IRA, transferring it to a new 401(k), or taking a withdrawal.

You have a Fidelity Youth® Account

The Fidelity Youth® Account is a great way for teens aged 13 to 17 to start learning about investing. It is a standard investment account with some key differences.

The account must be opened and monitored by a parent or guardian who already has a Fidelity account. They are responsible for the teen's activity and can help them get started on their investment journey. Teens can use the account to buy stocks, ETFs, and fractional shares. They can also invest in select Fidelity mutual funds, including the Fidelity ZERO funds, which have no expense ratio.

The Fidelity Youth® Account puts some risky investments and investment strategies off-limits, including options and margin trading. This helps to protect young investors from taking on too much risk. The account also offers in-app educational resources, articles on investing, and online research tools to help teens learn about investing and make informed decisions.

Once the account holder reaches the age of 18, the Fidelity Youth® Account will become a standard brokerage account. This means they will have more investment options and can continue to build their investment portfolio.

The Fidelity Youth® Account is a great way for teens to get hands-on experience with investing and learn about the stock market. It can help them develop valuable skills and knowledge that will benefit them in the future.

You have a Fidelity Go® account

If you have a Fidelity Go® account, you can benefit from the platform's low-cost diversification strategies, online planning tools, and access to an advisor if your account balance exceeds $25,000. Fidelity Go is a digital financial service that makes investing quick, easy, and affordable. There is no minimum amount required to open a Fidelity Go account. However, your account balance must be at least $10 for Fidelity to invest your money according to the investment strategy you've chosen.

Fidelity Go offers a robo-advisor service, which means that you answer a few questions about your financial goals, and then Fidelity Go will suggest an investment strategy for your account. The platform will then manage your money in accordance with your goal, helping you track your progress along the way.

Fidelity Go offers tiered pricing based on your account balance. You won't pay an advisory fee for a balance under $25,000, but you will pay a 0.35% annual fee for balances of $25,000 or more. There are no trading fees, transaction fees, or rebalancing fees.

Fidelity Go accounts hold a combination of Fidelity Flex® mutual funds, which generally hold domestic stocks, foreign stocks, bonds, or short-term investments. Depending on your investment strategy and your account, Fidelity will choose the funds that will help you meet your goals.

Fidelity Go also provides access to financial coaching sessions with trained advisors once your account reaches $25,000. These sessions can cover topics such as budgeting, managing debt, and retirement planning.

You have a Fidelity Roth IRA account

If you have a Fidelity Roth IRA account, you can benefit from tax-free retirement income. This is because you contribute money that has already been taxed to this account, and any investment growth is tax-free. You can also withdraw contributions at any time without tax or penalty.

There are no account-opening fees or minimums, and you can invest with as little as $1. You can choose from a broad range of investment options, including target-date funds.

Fidelity Go® is a managed account service that can help with both financial planning and investing. There is no minimum amount required to open a Fidelity Go account, but to invest your money according to the investment strategy you've chosen, your account balance must be at least $10. There is no advisory fee for balances under $25,000, and a 0.35% advisory fee for balances of $25,000 or more.

If you are looking for a more comprehensive investment management solution, consider a Portfolio Advisory Services Account or a Separately Managed Account. If you want to work with a Fidelity advisor, you can also consider Fidelity Wealth Management. These services have investment minimums.

You have a brokerage account with Fidelity

A brokerage account is a standard investment account. Anyone over the age of 18 can open one, and they are a good option for those investing for retirement or for specific goals. You can add as much money as you want to the account, whenever you want, and you can access a wide range of investment options. You can also generally withdraw any cash in the account whenever you want.

There are no fees or minimums to open a brokerage account with Fidelity, and the company has been rated highly by NerdWallet, StockBrokers.com, and Kiplinger.

However, it is important to note that a brokerage account is a taxable account, meaning you will generally have to pay taxes on any realised investment profits every year.

How to open a brokerage account with Fidelity

Opening a brokerage account with Fidelity is straightforward. You will need to select the type of account you want and provide some personal details to confirm your identity and employment information. Once you have done this, you will create a username and password and then be guided through the process of funding your new account by transferring money from a bank or another brokerage account.

How to automate your investments

Fidelity offers the option to automate your investments by setting up automatic contributions to your investment accounts through direct deposit from your paycheck or recurring bank transfers. This can help ensure that you save and invest regularly, reducing the temptation to spend and avoiding overreactions to market fluctuations.

How to choose your investments

Fidelity offers a wide range of investment options, including stocks, bonds, mutual funds, ETFs, options, forex, and cryptocurrencies. You can also purchase fractional shares, allowing you to invest in higher-cost stocks by buying a slice of a share.

How to buy your investments

For stocks, mutual funds, and ETFs, you will generally need to look up the investment's ticker symbol and then decide on a dollar amount or number of shares to buy.

How to manage your investments

It is normal for investments to fluctuate over the short term. Try to stay focused on the long-term performance of your portfolio and your investing goals. It is a good idea to periodically check in on your plan, including rebalancing your investments as necessary.

Fidelity offers a range of tools and resources to help you manage your investments, and you can also work with a financial professional through your retirement plan at work or with a firm like Fidelity.

Frequently asked questions