Unleash Your Inner Investor: Mastering Automatic Investing with Fidelity

Want to build wealth on autopilot? Setting up automatic investments with Fidelity is your secret weapon. Forget timing the market; this is about time in the market. It’s a powerful strategy, and I’m going to walk you through exactly how to do it.

The Straightforward Path to Automated Investing

Setting up automatic investment in Fidelity is a relatively simple process, designed to help you consistently invest without the daily hassle. Here’s a breakdown of the steps:

1. Log into your Fidelity Account: First, access your Fidelity account through their website (Fidelity.com) or the Fidelity mobile app. Ensure you have your username and password handy. Security first, folks!
2. Navigate to “Accounts & Trade”: Once logged in, hover over the “Accounts & Trade” tab in the navigation menu. A dropdown menu will appear.
3. Select “Automatic Investments”: Within the “Accounts & Trade” dropdown, select the “Automatic Investments” option. This will take you to the hub for setting up your automated investing plans.
4. Choose your Account: You’ll see a list of eligible accounts. Select the account you want to use for your automatic investments (e.g., a brokerage account, Roth IRA, Traditional IRA). Remember, the type of account dictates the tax implications!
5. Select “Start a new plan”: Click the button to begin creating your automatic investment plan. The interface might change slightly over time, but look for clear and direct language.
6. Choose your Investment: This is where the magic happens. You can choose from a wide array of investment options, including:
   • Mutual Funds: Fidelity offers a vast selection of mutual funds, covering various asset classes and investment strategies.
   • Exchange-Traded Funds (ETFs): ETFs provide diversification similar to mutual funds but trade like stocks, offering more flexibility.
   • Stocks: If you’re feeling adventurous and have done your research, you can even automate purchases of individual stocks. Be cautious with this option!
7. Specify Amount and Frequency: Decide how much you want to invest and how often. You can choose weekly, bi-weekly, or monthly investments. Consistency is key here!
8. Choose your Start Date: Select the date you want your automatic investments to begin. Make sure you have sufficient funds in your funding account before the scheduled date.
9. Designate your Funding Source: Specify the bank account you want Fidelity to draw the funds from. You’ll likely need to link your bank account if you haven’t already done so.
10. Review and Confirm: Double-check all the details of your automatic investment plan. Make sure everything is correct before confirming.
11. Activate your plan: Once you’re satisfied, activate your plan. Fidelity will send you a confirmation email.
12. Monitor and Adjust (Optional): While the beauty of automation is hands-off investing, it’s wise to periodically monitor your plan and make adjustments as needed based on your investment goals and risk tolerance. Life changes, so should your plan!

Navigating Automatic Investment Options in Fidelity

Choosing the Right Investments

Fidelity provides tools and resources to help you select appropriate investments for your automatic investing plan. Do your homework! Utilize Fidelity’s research tools, read fund prospectuses, and consider your personal risk tolerance. Don’t just blindly follow recommendations.

Understanding Minimum Investment Requirements

Be aware of any minimum investment requirements for the funds or ETFs you choose. Some may have higher initial minimums than others. Fidelity offers many zero minimum index funds.

Reinvesting Dividends

Consider setting up dividend reinvestment within your Fidelity account. This means that any dividends earned from your investments will automatically be reinvested, further compounding your returns over time.

FAQs: Your Burning Questions Answered

Here are answers to frequently asked questions to solidify your understanding of setting up automatic investments with Fidelity:

1. What types of accounts are eligible for automatic investing in Fidelity?

   Most taxable brokerage accounts, Traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs are eligible for automatic investing. However, certain specialized accounts may have restrictions. Check with Fidelity directly if you’re unsure about your specific account.

2. Can I set up automatic investments for 529 college savings plans?

   Yes! Fidelity offers automatic investments for its 529 college savings plans, making it easy to regularly contribute to your children’s future education.

3. Is there a fee to set up automatic investments with Fidelity?

   Generally, no. Fidelity does not charge a fee for setting up automatic investments themselves. However, you will still be subject to the expense ratios of the mutual funds or ETFs you choose to invest in. These are standard investment costs, not Fidelity fees.

4. How much money do I need to start automatic investing?

   This depends on the investments you choose. Some mutual funds and ETFs have minimum investment requirements, while others, particularly Fidelity’s zero minimum index funds, allow you to start with as little as $1. Stocks will require at least the price of one share.

5. Can I change or cancel my automatic investment plan?

   Absolutely! You have full control over your automatic investment plan. You can change the amount, frequency, investment options, or start date at any time. You can also cancel the plan altogether if needed. It’s all managed online.

6. What happens if there aren’t enough funds in my bank account when a scheduled investment occurs?

   Fidelity will typically attempt the transaction a few times. If the funds are still unavailable, the investment will be skipped for that period. It’s crucial to ensure sufficient funds are available to avoid missed investments and potential fees from your bank.

7. Can I automate investments into individual stocks?

   Yes, Fidelity allows automatic investments into individual stocks. However, this requires careful research and understanding of the stock market. It’s generally recommended to diversify your portfolio with mutual funds or ETFs instead of solely relying on individual stocks.

8. How often can I schedule my automatic investments?

   Fidelity typically offers weekly, bi-weekly, and monthly options for scheduling automatic investments. This flexibility allows you to align your investments with your paycheck schedule or other financial goals.

9. Will I receive confirmation of my automatic investments?

   Yes, Fidelity will send you a confirmation email each time an automatic investment is executed. You can also view your transaction history online or through the mobile app.

10. How do I reinvest dividends and capital gains automatically?

    Within your Fidelity account settings, you can elect to have dividends and capital gains automatically reinvested back into the same investment. This is a powerful way to accelerate your returns through compounding. Look for the “Reinvest Dividends” option in your account settings.

11. What happens if the market is down on the day my automatic investment is executed?

    This is actually a good thing! When the market is down, your automatic investment buys more shares at a lower price. This is known as dollar-cost averaging and helps reduce the risk of timing the market.

12. How do I decide which investments are right for me?

    This is the million-dollar question! Consider your risk tolerance, investment goals, and time horizon. Use Fidelity’s research tools, read fund prospectuses, and consult with a financial advisor if needed. Index funds and target-date funds are often good starting points for beginners.

By following these steps and understanding the FAQs, you’ll be well on your way to building wealth automatically with Fidelity. Remember, investing is a marathon, not a sprint. Stay consistent, stay informed, and watch your portfolio grow over time. Good luck!