Master Your Future: A Step-by-Step Guide to Changing Your 401(k) Investments with Fidelity
Hey there, future financial guru! Are you ready to take control of your retirement destiny? If you've got a 401(k) with Fidelity, you're already on a fantastic path, but knowing how to manage your investments within that plan is absolutely crucial for maximizing your growth potential. It's not just about setting it and forgetting it; market conditions, personal goals, and even your risk tolerance can change over time.
This comprehensive guide will walk you through every single step of how to change your 401(k) investments with Fidelity, empowering you to make informed decisions and steer your retirement savings exactly where you want them to go.
Step 1: Log In and Assess Your Current Situation – Let's Get Started!
Before you make any changes, the first and most important step is to understand where you are right now.
Sub-heading: Accessing Your Fidelity NetBenefits Account
Your Gateway to Your 401(k): Fidelity 401(k) plans are typically managed through Fidelity NetBenefits. This is your online portal for all things related to your workplace retirement plan.
Logging In:
Open your web browser and navigate to the Fidelity NetBenefits website (you can usually find this by searching "Fidelity NetBenefits" or by going directly to
netbenefits.fidelity.com).Enter your username and password. If you've forgotten them, there are clear links to help you retrieve or reset them. Don't worry, it happens to the best of us!
Once logged in, you'll land on your account summary page, which provides an overview of your 401(k) balance and current investments.
Sub-heading: Understanding Your Current Asset Allocation
The Big Picture: Your asset allocation is the mix of different investment types (like stocks, bonds, and cash) within your portfolio. It's a key driver of your risk and return.
Finding Your Allocation:
Look for sections like "Portfolio," "Account Positions," or "Investments" within your NetBenefits account.
Here, you'll see a breakdown of where your money is currently invested. This might be presented as percentages across different asset classes or as a list of individual funds.
Take note of your current percentages. Are you heavily weighted in stocks, or do you have a more conservative mix? This will be your starting point.
Step 2: Define Your Investment Goals and Risk Tolerance – Know Thyself!
This is where you become the financial architect of your future. Changing investments without a clear strategy is like driving without a map.
Sub-heading: Reassessing Your Time Horizon
How Long Until Retirement? Your time horizon is the number of years you have until you plan to retire.
Longer time horizon (20+ years): You generally have more time to ride out market fluctuations, so a higher allocation to growth-oriented investments (like stocks) might be appropriate.
Shorter time horizon (less than 10 years): As you get closer to retirement, preserving capital becomes more important, so you might consider a more conservative mix with a higher allocation to bonds.
Sub-heading: Determining Your Risk Tolerance
How Comfortable Are You with Market Swings? Risk tolerance is your emotional and financial ability to handle potential losses in your investments.
Aggressive: You're comfortable with significant market ups and downs for the potential of higher long-term returns.
Moderate: You seek a balance between growth and capital preservation.
Conservative: You prioritize capital preservation and are less comfortable with volatility, even if it means lower potential returns.
Fidelity's Tools: Fidelity often provides risk assessment questionnaires within the "Planning & Advice" section of NetBenefits. These tools can help you objectively determine your risk tolerance. Don't skip this! It's incredibly helpful.
Sub-heading: Understanding Your Investment Objectives
What Are You Trying to Achieve? While retirement is the primary goal, consider if you have other financial objectives tied to this account, even indirectly. Are you aiming for aggressive growth, consistent income, or a blend?
Step 3: Research Available Investment Options – Explore Your Toolkit!
Your employer-sponsored 401(k) plan with Fidelity will offer a curated selection of investment funds. You won't have access to every single fund Fidelity offers, but there will still be plenty of choices.
Sub-heading: Navigating Your Plan's Fund Lineup
Where to Find It: Within NetBenefits, look for a section like "Investment Choices," "Fund Performance," or "Plan Information and Documents."
Key Information to Look For:
Fund Name: The official name of the fund (e.g., "Fidelity 500 Index Fund" or "Vanguard Total Bond Market Index Fund").
Ticker Symbol: A short abbreviation used to identify the fund (e.g., FXAIX for Fidelity 500 Index Fund).
Expense Ratio (ER): This is the annual fee charged as a percentage of your investment. Lower expense ratios are generally better for long-term growth. Fidelity is known for offering funds with competitive, low expense ratios.
Performance History: While past performance doesn't guarantee future results, it can give you an idea of how the fund has performed over various periods (1-year, 5-year, 10-year, etc.).
Fund Objective: What the fund aims to achieve (e.g., "seek to approximate the performance of the S&P 500 index").
Asset Class: What type of investments the fund holds (e.g., U.S. stocks, international stocks, bonds, money market).
Sub-heading: Common Fund Types You Might Encounter
Target Date Funds (TDFs): These are all-in-one funds that automatically adjust their asset allocation over time, becoming more conservative as you approach your target retirement date. They are a popular choice for hands-off investors. Fidelity offers a range of Freedom Funds (e.g., Fidelity Freedom Index 2050 Fund).
Index Funds: These funds aim to mimic the performance of a specific market index, like the S&P 500 (large U.S. companies) or a total U.S. stock market index. They typically have very low expense ratios.
Actively Managed Mutual Funds: These funds are managed by a professional fund manager who actively buys and sells securities with the goal of outperforming a specific benchmark. They often have higher expense ratios than index funds.
Bond Funds: These funds invest in various types of bonds (government, corporate) and are generally considered less volatile than stock funds. They can provide income and diversification.
Money Market Funds: These are very low-risk investments that hold short-term debt instruments. They are typically used for holding cash and offer minimal returns, but provide stability.
Step 4: Make Your Investment Choices – Allocate with Intent!
Now it's time to put your plan into action and select the funds that align with your goals and risk tolerance.
Sub-heading: Developing Your New Asset Allocation
Based on Your Assessment: Using your time horizon and risk tolerance from Step 2, decide on your ideal percentage allocation across different asset classes. For example:
Younger Investor (Aggressive): 80% Stocks / 20% Bonds
Mid-Career Investor (Moderate): 60% Stocks / 30% Bonds / 10% Cash
Near Retirement (Conservative): 40% Stocks / 50% Bonds / 10% Cash
Diversification is Key: Don't put all your eggs in one basket! Diversify across different asset classes, geographic regions (U.S. vs. international), and company sizes (large-cap, mid-cap, small-cap).
Sub-heading: Selecting Specific Funds
Match Funds to Your Allocation: Once you have your desired percentages for each asset class, choose the specific funds from your plan's lineup that fit those categories.
Prioritize Low Expense Ratios: For long-term investing, expense ratios have a significant impact on your returns. Whenever possible, opt for low-cost index funds over high-cost actively managed funds, especially for broad market exposure.
Consider Target Date Funds: If you prefer a "set it and forget it" approach, a target date fund matching your approximate retirement year can be an excellent choice, as it handles the asset allocation and rebalancing for you.
Step 5: Execute the Change in Your Fidelity NetBenefits Account – The Action Phase!
This is where you officially change your investments. Fidelity makes this process quite user-friendly.
Sub-heading: Navigating to the "Change Investments" Section
Find "Quick Links": On your 401(k) summary page within NetBenefits, look for a "Quick Links" menu or similar option.
Select "Change Investments": Click on the option that allows you to change your investment elections or reallocate your existing balance. The exact wording might vary slightly.
Sub-heading: Two Types of Changes: Future Contributions vs. Existing Balance
You'll typically have two distinct ways to modify your investments:
Change Future Contributions: This tells Fidelity how you want new money (from your paychecks) to be invested moving forward.
You'll see a list of your plan's available funds.
Enter the percentage of each new contribution you want directed to each fund. Ensure your percentages add up to 100%!
Exchange Existing Balance (Rebalance): This allows you to sell existing holdings in one fund and buy into another, effectively reallocating the money you've already invested.
You'll typically see your current holdings and options to "exchange" or "reallocate."
You'll specify which funds you want to sell from and which funds you want to buy into, usually by percentage. This is how you'll move money from your old investment choices to your new ones.
Sub-heading: Review and Confirm
Carefully Review: Before submitting, double-check all your selections and percentages. Make sure they align with your planned asset allocation.
Confirm: Once you're confident, click the "Confirm" or "Submit" button. Fidelity will usually provide a confirmation message.
Important Note: Changes to your future contributions typically take effect with your next paycheck. Changes to your existing balance usually execute overnight or within a day or two, depending on market hours and processing times. There are generally no fees to rebalance your 401(k) within Fidelity, and it is not a taxable event as it's within a tax-advantaged account.
Step 6: Monitor and Rebalance Periodically – Stay on Course!
Changing your investments isn't a one-and-done deal. Your portfolio will naturally drift over time due to market performance.
Sub-heading: Why Rebalance?
Maintain Target Allocation: If stocks have a fantastic year, your stock allocation might grow larger than you intended, increasing your overall risk. Rebalancing brings your portfolio back to your desired percentages.
Discipline: It helps you "buy low and sell high" by trimming winning assets and adding to underperforming ones (which may be undervalued).
Risk Management: Ensures your portfolio's risk level remains aligned with your comfort zone.
Sub-heading: How Often to Rebalance
Time-Based: Many investors rebalance annually or semi-annually (e.g., every January and July). This is a simple and consistent approach.
Threshold-Based: You can rebalance when an asset class deviates by a certain percentage from its target (e.g., if your stock allocation goes from 60% to 65% or falls to 55%).
Fidelity does not currently offer automatic rebalancing for 401(k) accounts, so you'll need to do this manually.
Sub-heading: Reviewing Your Portfolio's Performance
Beyond Just Balance: While your overall balance is important, also look at how your individual funds are performing relative to their benchmarks and your expectations.
Consider Life Changes: Major life events (marriage, children, new job, nearing retirement) should also prompt a review of your investment strategy.
Related FAQ Questions (How to...)
Here are 10 quick answers to common questions about managing your Fidelity 401(k) investments:
How to: Find my 401(k) account on Fidelity?
Go to netbenefits.fidelity.com and log in with your username and password. Your 401(k) will be listed on your account summary page.
How to: Know what investment options are available in my Fidelity 401(k)?
Once logged into NetBenefits, look for sections like "Investment Choices," "Fund Performance," or "Plan Information and Documents" to see your plan's specific fund lineup.
How to: Determine my risk tolerance for my 401(k) investments?
Fidelity NetBenefits often provides interactive risk assessment questionnaires within the "Planning & Advice" section that can help you understand your comfort level with investment risk.
How to: Change future contributions to my Fidelity 401(k)?
Log in to NetBenefits, find "Quick Links" or "Change Investments," and select the option to modify your future contribution elections. Enter percentages for each fund (must sum to 100%).
How to: Rebalance my existing 401(k) investments with Fidelity?
Within the "Change Investments" section of NetBenefits, look for an option to "Exchange" or "Reallocate" your existing balance. You can then sell holdings in one fund and buy into another to adjust your percentages.
How to: Understand the fees associated with my Fidelity 401(k) investments?
Look for the "Expense Ratio" (ER) for each fund listed in your plan's investment options. Lower expense ratios mean more of your money stays invested. Your plan documents (like the 408(b)(2) Fee Disclosure) will also detail any administrative fees.
How to: Choose between a Target Date Fund and individual funds in my 401(k)?
Target Date Funds offer automatic diversification and rebalancing, ideal for hands-off investors. Individual funds give you more control and potentially lower fees if you select low-cost index funds and manage rebalancing yourself.
How to: See the performance of my Fidelity 401(k) investments?
On your NetBenefits account, navigate to your portfolio summary or investment performance section. You can typically view historical returns for your overall portfolio and individual funds.
How to: Know if I'm diversified enough in my Fidelity 401(k)?
Review your asset allocation. Ensure you have a mix of stocks (U.S. and international) and bonds that aligns with your risk tolerance and time horizon. Avoid putting too much into a single fund or asset class.
How to: Get help with my Fidelity 401(k) investments?
Fidelity provides customer service support via phone (check NetBenefits for specific numbers for your plan) and online chat. They also offer educational resources and planning tools on their website.