Do you invest with Fidelity Investments or are you thinking about investing with them? This popular online discount brokerage is one of money expert Clark Howard’s favorites, for many reasons.
Investing with Fidelity: Here’s what you need to know
Fidelity Investments is a multinational financial services corporation based in Boston, Massachusetts, with $7.4 trillion in assets under management.
But how much do your really know about the company? In this article, we’ll take a look at some things that make Fidelity stand out from the competition, including its no-fee index funds, its 2% cash-back credit card that’s linked to your investment account, and more.
Investing with Fidelity: Table of contents
- 401(k) administration
- Target date funds
- An industry first: No-fee index funds
- Fidelity Go roboadvisor service
- Start investing with no minimum in many funds
- Fidelity’s 2% cash-back credit card
- Office locations
Fidelity is one of the nation’s leading 401(k) administrators
You may already be familiar with Fidelity if they administer the 401(k) plan where you work. Fidelity partners with more than 22,000 companies to manage employee benefits programs.
According to the latest data, the average Fidelity 401(k) had a balance of $103,700 during the first quarter of 2019. That’s an 8% increase from $95,600 in Q4 2018.
Meanwhile, the number of people with north of $1 million in their 401(k) increased to 180,000 over the same time period. That’s up from 133,800 at the end of Q4 2018.
The company offers a full range of target date retirement funds
Let’s say you’re one of those people who has a 401(k) at work through Fidelity. What investments are you going to pick for your Fidelity 401(k)?
Clark Howard loves to keep investing simple. Therefore, he’s long recommend target date funds.
A target date retirement fund is a simple investment portfolio that’s typically made up of stocks and bonds in a specific ratio. You pick the year you want to retire and just buy that fund.
Then, the mix of stocks and bonds automatically changes as you age and draw closer to retirement. You don’t have to lift a finger!
Fidelity offers a full range of target date funds:
- Investments: A combination of stocks, bonds and cash equivalents
- Years available: 2025, 2030, 2035, 2040, 2045, 2050 and 2055
- Expense: Between 0.1% and 0.75%
- Minimum investment: No minimums to begin investing in target date funds
Fidelity pioneered groundbreaking no-fee index funds
The company also launched a slate of groundbreaking no-fee index funds — the Fidelity ZERO funds — in early August 2018. All four of them have absolutely zero in the way of fees:
- Total Market Index Fund (FZROX)
- International Index Fund (FZILX)
- Large Cap Index Fund (FNILX)
- Extended Market Index Fund (FZIPX)
Just to prove a point, here’s the fee chart for the investments listed above:
|Distribution and/or Service (12b-1) fees||0.00%|
|Total annual operating expenses||0.00%|
That means every single penny you invest goes toward building long-term wealth — instead of getting eaten up by pesky fees! So far, Fidelity’s move to zero-fee index funds has yet to be matched by its competitors.
Fidelity Go is the company’s roboadvisor service
Fidelity Go is the company’s answer to roboadvising, which has taken the investing world by storm.
This service uses a combination of computer models and human advisors to manage your money. It has expenses of 0.35% per year and there’s no minimum to get started.
However, you must have at least $10 in your account for the Fidelity algorithm to start investing it for you.
Start investing with no minimum in many funds
One of the truly great things about Fidelity is that you don’t need big bucks to open an account with the company. With no account minimums on most investments, it’s possible to get started investing today!
We should note that a few select investments do require a minimum of $2,500. But that’s more the exception than the rule with Fidelity.
Fidelity has a 2% cash-back credit card
Like cash-back credit cards? How about a credit card that pays you 2% back directly into your eligible investment account?
That’s right, the Fidelity® Rewards Visa Signature® Credit Card offers you 2% cash back on all purchases. Your rewards are deposited into a qualifying Fidelity account, whether it’s a brokerage account, 529 college savings plan, retirement account or health savings account.
Fidelity is in the neighborhood
Unlike its archrival Vanguard, Fidelity actually has office locations.
There are 10 regional offices and more than 190 financial planning offices for customers to physically visit. That’s great if you’re used to doing your financial business in person rather than through a computer or over the phone.
You can see a complete list of branch locations here.
Fidelity can be a great place to invest, whether you’re just getting started or already have a sizeable portfolio. We hope this guide has been helpful. If you have additional questions, please consider calling our Consumer Action Center.
Contact Clark’s Consumer Action Center — a FREE help line open Monday-Thursday from 10 a.m. – 7 p.m and Friday from 10 a.m. – 4 p.m. EST. We have volunteers available to answer YOUR concerns! Call Team Clark @ 404-892-8227.