Ready to take control of your retirement savings? It's a fantastic decision to actively manage your 401(k), and with Fidelity, you generally have a good degree of flexibility. The question of "how often can I change my 401(k) investments Fidelity" is a common one, and the good news is that Fidelity typically allows for frequent adjustments to your investment allocations within your 401(k) plan.
This comprehensive guide will walk you through everything you need to know, from understanding the typical frequency of changes to the strategic considerations behind them. Let's dive in!
Taking Control: How Often Can You Change Your 401(k) Investments with Fidelity?
The general answer is that you can typically change your 401(k) investments with Fidelity at any time, usually on a daily basis. This flexibility allows you to adjust your portfolio as market conditions change or as your personal financial goals evolve. However, it's crucial to remember that while the ability to change is often daily, the frequency with which you should change them is a different matter entirely. Your specific 401(k) plan rules, set by your employer, might have some minor limitations, but daily trading is a common feature.
Step 1: Engage with Your Plan Documents – Your Ultimate Guide!
Before making any moves, your very first and most important step is to consult your specific 401(k) plan's Summary Plan Description (SPD) or other plan documents.
Why is this so important? While Fidelity provides the platform, your employer's plan dictates the specific rules. This document will outline the precise details regarding:
Investment options available: What funds can you actually invest in?
Trading frequency: Are there any specific limitations on how often you can make changes? (Highly unlikely for general asset allocation, but some niche funds might have restrictions.)
Fees associated with trades: While often minimal or non-existent in 401(k)s for rebalancing, it's good to be aware. Some funds might have short-term redemption fees if you sell too quickly after buying.
Rebalancing features: Does your plan offer any automatic rebalancing options?
How to find it: You can usually access your plan documents by logging into your Fidelity NetBenefits account (or whatever portal your employer uses for your 401(k)). Look for sections like "Plan Information," "Documents," or "Quick Links." If you can't find it online, contact your HR department or the Fidelity Retirement Benefits Line.
Step 2: Understanding the Types of Investment Changes You Can Make
When you want to adjust your 401(k) investments, you're primarily looking at two types of changes:
Sub-heading: Redirecting Future Contributions
This means changing how your new contributions (from your paycheck) will be allocated among the available investment options going forward.
Example: If you're currently putting 70% into a stock fund and 30% into a bond fund, you could change it to 80% stock and 20% bond for all future contributions.
Frequency: You can typically change this as often as you like, often on a bi-weekly basis, aligning with your pay periods.
Sub-heading: Exchanging Existing Balances (Rebalancing)
This involves moving money that's already invested from one fund to another within your 401(k). This is often referred to as "rebalancing" your portfolio.
Example: You started with 60% in a stock fund and 40% in a bond fund. Over time, your stock fund has performed exceptionally well, and now it makes up 75% of your portfolio. To get back to your target 60/40 allocation, you would sell some of your stock fund holdings and buy more of the bond fund.
Frequency: As mentioned, Fidelity generally allows you to make these exchanges daily. However, this doesn't mean you should!
Step 3: Strategic Considerations for How Often to Change Your Investments
While the technical ability to change your investments with Fidelity is quite frequent, frequent trading is generally not recommended for long-term retirement accounts like a 401(k). Here's why, and what strategies to consider:
Sub-heading: The Pitfalls of Frequent Trading
Emotional Decision-Making: Reacting to short-term market fluctuations often leads to buying high and selling low, which is detrimental to long-term growth.
Missing Out on Gains: Constantly moving your money around can cause you to miss out on significant upswings in the market.
Transaction Costs (Though Less Common in 401(k)s): While most 401(k)s through Fidelity won't charge commissions for internal fund exchanges, some specific funds may have short-term trading fees or redemption fees if you sell shares too quickly after purchasing them. Always check the fund's prospectus.
Time and Effort: Constantly monitoring and adjusting your portfolio takes time and can become a source of stress.
Sub-heading: The Power of Rebalancing
Rebalancing is the practice of periodically adjusting your portfolio back to your target asset allocation. It's a disciplined approach that helps manage risk and ensure your portfolio remains aligned with your long-term goals.
Why Rebalance? Over time, some investments will perform better than others, causing your portfolio's original asset allocation to drift. If your stock investments soar, they might make up a larger percentage of your portfolio than you initially intended, potentially exposing you to more risk than you'd prefer. Rebalancing brings you back in line.
Common Rebalancing Approaches:
Calendar-Based: This is the simplest approach. You rebalance on a set schedule, such as:
Annually (most common and often recommended)
Semi-annually
Quarterly (less common for 401(k)s, but still an option)
This method helps remove emotion from the decision.
Threshold-Based: You rebalance when a specific asset class deviates from its target allocation by a certain percentage.
Example: If your target is 60% stocks and 40% bonds, you might rebalance if stocks go above 65% or below 55%. This can be more active but ensures you only adjust when truly necessary.
Hybrid Approach: A combination of the above – reviewing your portfolio on a set schedule (e.g., quarterly) but only rebalancing if it has strayed by a certain threshold.
How Fidelity Helps with Rebalancing: While Fidelity doesn't offer automatic rebalancing for all 401(k) plans, they provide tools and resources to help you manually rebalance. Some target-date funds offered through Fidelity do rebalance automatically within the fund itself, becoming more conservative as the target date approaches.
Step 4: How to Change Your 401(k) Investments on Fidelity NetBenefits
Making changes to your 401(k) investments through Fidelity's NetBenefits platform is generally straightforward.
Log in to your Fidelity NetBenefits account: Go to NetBenefits.fidelity.com and enter your username and password.
Navigate to your 401(k) plan: Once logged in, you'll typically see a dashboard with your various Fidelity accounts. Select your 401(k) plan.
Find the "Change Investments" or "Manage Investments" section: This is usually found under "Quick Links," "Investments," or a similar menu option. The exact wording might vary slightly depending on your plan's setup.
Choose your action:
To redirect future contributions: Look for an option like "Change Future Investments," "Future Contributions Allocation," or "Contribution Elections." You'll be able to specify percentages for where your new money goes.
To exchange existing balances (rebalance): Look for "Exchange," "Reallocate," or "Change Current Investments." You'll see your current holdings and be able to specify how much you want to sell from one fund and buy into another.
Review and Confirm: Before finalizing, the platform will show you a summary of your proposed changes. Carefully review everything to ensure it matches your intentions.
Execute the Trade: Confirm your changes. The trades will typically execute at the next available market closing price.
Step 5: What to Consider When Making Changes
Your Risk Tolerance: As you age or your financial situation changes, your comfort level with risk might shift. Younger investors with a longer time horizon can typically afford to take on more risk, while those closer to retirement might prefer a more conservative approach.
Time Horizon: How many years until you plan to retire? A longer time horizon allows you to ride out market volatility.
Market Conditions (Cautiously!): While you shouldn't react to every market swing, significant economic shifts or prolonged market trends might warrant a review of your allocation. However, avoid emotional decisions.
Diversification: Ensure your portfolio is diversified across different asset classes (stocks, bonds, real estate, etc.) to mitigate risk.
Fees and Expenses: Always be aware of the expense ratios of the funds you choose. Lower fees can significantly impact your long-term returns.
Taxes (Less of an Issue in 401(k)): One of the great benefits of a 401(k) is that investment changes within the plan are not taxable events. This removes a significant concern compared to managing investments in a taxable brokerage account.
Frequently Asked Questions (FAQs)
Here are 10 related "How to" questions with quick answers to further guide you:
How to access my Fidelity 401(k) account?
You can access your Fidelity 401(k) account by logging into NetBenefits.fidelity.com with your username and password, provided by your employer.
How to find my 401(k) plan documents on Fidelity?
Log into NetBenefits, navigate to your 401(k) plan, and look for sections like "Plan Information," "Documents," or "Quick Links."
How to change my future 401(k) contributions with Fidelity?
Log into NetBenefits, go to your 401(k), and find the "Change Future Investments" or "Contribution Elections" section to adjust your allocation percentages.
How to rebalance my existing 401(k) investments on Fidelity?
Within your NetBenefits 401(k) account, look for "Exchange," "Reallocate," or "Change Current Investments" to move money between funds.
How to know if my 401(k) plan has automatic rebalancing?
Check your plan's Summary Plan Description (SPD) or contact Fidelity customer service. Many target-date funds offer automatic rebalancing.
How to choose the right investments for my 401(k)?
Consider your risk tolerance, time horizon, and diversification. Fidelity offers tools and resources, and you might also consider target-date funds for simplicity or consult a financial advisor.
How to understand the fees in my Fidelity 401(k)?
Your plan documents and fund prospectuses will detail any administrative fees, expense ratios, or short-term trading fees. Fidelity aims for transparency in pricing.
How to deal with multiple 401(k)s from old jobs?
You have several options: leave them where they are (if allowed), roll them over into a new employer's 401(k) (if accepted), or roll them over into an IRA (often recommended for more control and investment options).
How to avoid making emotional investment decisions in my 401(k)?
Stick to a disciplined rebalancing schedule (e.g., annually) and avoid checking your account too frequently during market volatility. Focus on your long-term goals.
How to get personalized investment advice for my Fidelity 401(k)?
Fidelity offers financial advisors and planning tools that can help you create a personalized investment strategy. You can also consult an independent financial planner.
