Automating your investments with Fidelity is one of the smartest moves you can make for your financial future. It's like setting your savings on autopilot, ensuring consistent contributions and taking the emotion out of investing. No more trying to "time the market" or forgetting to invest – just steady, disciplined growth.
So, are you ready to unlock the power of automated investing with Fidelity? Let's get started on this journey together!
A Comprehensive Guide to Managing Automatic Investments with Fidelity
Automatic investments, also known as recurring investments or dollar-cost averaging, allow you to invest a fixed amount of money at regular intervals. This strategy can help reduce the impact of market volatility by averaging out your purchase price over time. Fidelity offers a robust platform to set up and manage these automated contributions, giving you peace of mind and a clear path towards your financial goals.
Step 1: Understand the "Why" Behind Automated Investing
Before we dive into the "how," let's spend a moment on the "why." Why is automated investing so beneficial?
Dollar-Cost Averaging (DCA): This is the core principle. By investing a fixed amount regularly, you buy more shares when prices are low and fewer shares when prices are high. Over time, this can lead to a lower average cost per share, potentially maximizing your returns in volatile markets. It removes the stress of trying to predict market movements.
Discipline and Consistency: Life gets busy. It's easy to forget to transfer money or make that investment. Automation ensures your investment plan stays on track, building consistent habits without conscious effort.
Compounding Power: The sooner you invest, the longer your money has to grow. Regular, automated contributions supercharge the effect of compounding, where your earnings generate their own earnings. Even small, consistent contributions can grow into substantial sums over decades.
Reduced Emotional Investing: Market fluctuations can trigger emotional decisions – panic selling during downturns or FOMO (fear of missing out) buying during peaks. Automatic investing helps you stick to your plan, regardless of market noise.
Are you convinced yet? Let's move on to the practical steps!
Step 2: Accessing the Automatic Investment Feature on Fidelity
Fidelity has made it quite user-friendly to set up recurring investments. You can do this through their website or mobile app.
Sub-heading 2.1: Through the Fidelity Website
Log In: Go to Fidelity.com and securely log in to your account.
Navigate to "Trade": Once logged in, look for the "Trade" option in the top black navigation bar. Hover over it or click on it.
Select "Recurring Investment": From the dropdown menu under "Trade," select "Recurring Investment." This is your gateway to automated investing.
Sub-heading 2.2: Through the Fidelity Mobile App
Open the App: Launch the Fidelity Investments app on your smartphone or tablet.
Tap "Transact": At the bottom of the screen, you'll typically find a "Transact" icon. Tap on it.
Choose "Recurring Transfers & Investments": From the options presented, select "Recurring Transfers & Investments."
Tap "Create": You'll then usually see an option to "Create" a new recurring plan.
Step 3: Setting Up Your Recurring Investment Plan
Now comes the exciting part – configuring your automatic investment! The process is fairly intuitive, and Fidelity guides you through each step.
Sub-heading 3.1: Choosing Your Investment Type
Fidelity allows you to set up recurring investments for a variety of security types:
Stocks/ETFs: Yes, you can now automate your stock and ETF purchases! This is a fantastic feature for building a diversified portfolio of individual companies or broad market exposure.
Mutual Funds: A popular choice for automated investing, mutual funds offer diversification and professional management. You can choose from Fidelity's extensive range of mutual funds or select from other firms.
Fidelity Basket Portfolios (formerly FidFolios): This innovative feature allows you to create a customized "basket" of stocks and ETFs and manage them as a single investment. Automating investments into a basket simplifies portfolio management even further.
Sub-heading 3.2: Selecting Your Account and Security
Choose an Account: Select the Fidelity account from which you want the funds to be invested (e.g., your Brokerage Account, Roth IRA, Traditional IRA, HSA, etc.).
Enter Ticker Symbol(s): For stocks and ETFs, you'll need to enter the ticker symbol of the investment you wish to purchase. You can often add multiple symbols at once (up to 10 for stocks/ETFs). For mutual funds, you'll select the specific fund. If you're unsure of a symbol, there's usually a search function available.
Sub-heading 3.3: Specifying Your Investment Amount and Frequency
Enter the Dollar Amount: Decide how much you want to invest in each chosen security per interval. Fidelity has low minimums for automatic investments:
Stocks/ETFs: As little as $1.
Fidelity Mutual Funds: As little as $10.
Note: Some non-Fidelity mutual funds may have higher minimums.
Select a Frequency: This is where you set the "auto" in automatic! Fidelity offers various frequencies:
Weekly
Every 2 Weeks (Bi-weekly)
Monthly
While Fidelity's automatic investment feature might sometimes default or emphasize monthly, they do offer weekly and bi-weekly for stocks, ETFs, and baskets. For recurring transfers, you may find options for monthly or annually, and a workaround for more frequent transfers (like bi-weekly) might involve setting up multiple monthly transfers on different dates.
Choose a Start Date: Pick the day you'd like your automatic investments to begin. Keep in mind that if the scheduled date falls on a holiday or weekend, the transaction will typically occur on the next business day.
Sub-heading 3.4: Funding Your Investment
You have two primary options for funding your automatic investments:
Linked Bank Account: This is often the most convenient method. You can directly link your external bank account to your Fidelity account, and the funds will be pulled automatically on your scheduled investment date. Make sure your bank account is linked and verified.
Fidelity Account Balance (Core Position): You can also fund your automatic investments from your Fidelity account's cash balance (your "core position"). If you choose this, ensure you have sufficient funds in your Fidelity account before each scheduled investment. It's a good practice to set up a separate recurring transfer from your bank to your Fidelity core position a few days before your investment date to ensure funds are available.
Sub-heading 3.5: Review and Confirm
Preview: Before finalizing, Fidelity will provide a summary of your recurring investment plan. Carefully review all the details: the investment type, ticker symbols, amounts, frequency, start date, and funding source.
Confirm: If everything looks correct, confirm your settings. Congratulations! You've successfully set up automatic investments with Fidelity. You'll likely receive a confirmation message.
Step 4: Managing Your Existing Automatic Investments
Life changes, and so might your investment strategy. Fidelity makes it easy to adjust or stop your recurring investments.
Sub-heading 4.1: Accessing Your Recurring Investment Plans
You can typically manage your existing plans in the same area where you set them up:
Fidelity Website: Log in, go to "Accounts & Trade," then "Account Features," and look for "Manage" next to "Recurring Transfers" or "Recurring Investments."
Fidelity Mobile App: Tap "Transact," then "Recurring Transfers & Investments."
Sub-heading 4.2: Modifying an Existing Plan
Once you've located your recurring investment plan, you'll usually have options to:
Change the Amount: Increase or decrease the dollar amount of your investment.
Adjust the Frequency: Switch from monthly to bi-weekly, or vice-versa, if applicable for your chosen investment type.
Change the Investment: You might be able to modify the specific stock, ETF, or mutual fund you're investing in.
Update Funding Source: Switch between your linked bank account and your Fidelity core position.
Remember to always review and confirm any changes you make.
Sub-heading 4.3: Stopping or Deleting a Plan
If you need to temporarily pause or permanently stop an automatic investment:
Locate the plan: Follow the steps in Sub-heading 4.1.
Select the option to "Stop" or "Delete": Fidelity typically provides clear options to stop or delete the recurring investment.
Be aware that if a transaction is scheduled within a few days (often 3-5 business days), you might not be able to stop that specific upcoming transaction, but future ones will be halted.
Step 5: Monitoring Your Progress and Staying Informed
Setting up automatic investments is a powerful first step, but it's also important to monitor your progress and stay informed.
Sub-heading 5.1: Reviewing Your Portfolio Regularly
While automatic investing is hands-off, it's not set it and forget it entirely. Periodically review your portfolio's performance.
Check Account Balances: See how your investments are growing.
Review Holdings: Ensure your portfolio diversification remains appropriate for your goals.
Rebalance (if necessary): Over time, some asset classes may grow more than others, throwing off your target allocation. While not strictly part of managing automatic investments, rebalancing is a crucial part of overall portfolio management and can involve adjusting your automatic contributions or making one-time trades.
Sub-heading 5.2: Understanding Market Conditions (Without Reacting Emotionally)
Stay generally informed about market trends and economic news, but resist the urge to make impulsive changes to your automatic investment plan based on short-term fluctuations. Remember, dollar-cost averaging thrives on consistency, even (and especially) during downturns, as you're buying shares at a lower price.
Sub-heading 5.3: Leveraging Fidelity's Resources
Fidelity offers a wealth of educational resources:
Learning Center: Explore articles and videos on various investment topics.
Research Tools: Utilize their robust research tools to evaluate potential investments for your recurring plan.
Customer Service: If you have any questions or encounter issues, don't hesitate to contact Fidelity's customer service. They are available to help.
Frequently Asked Questions (FAQs)
How to set up recurring investments for stocks and ETFs on Fidelity?
You can set up recurring investments for stocks and ETFs by logging into your Fidelity account, navigating to "Trade" > "Recurring Investment," selecting "Stocks/ETFs," choosing your account, entering the ticker symbol(s), specifying the dollar amount and frequency (weekly, bi-weekly, or monthly), selecting a start date, and confirming your linked bank account or core position as the funding source.
How to change the investment amount for an existing automatic investment on Fidelity?
Log in to your Fidelity account (website or app), go to the section where you manage recurring transfers/investments, find the specific plan you wish to modify, and you should see an option to edit or change the investment amount. Remember to save and confirm your changes.
How to stop an automatic investment on Fidelity?
To stop an automatic investment, log in to your Fidelity account, navigate to "Manage recurring transfers & investments," locate the plan you want to stop, and select the option to "Delete" or "Stop" the recurring activity. Be aware of any pending transactions that might still execute if they are too close to the cancellation date.
How to determine the best frequency for automatic investments (weekly, bi-weekly, monthly)?
The "best" frequency depends on your pay schedule and personal preference. Many people align it with their salary (e.g., bi-weekly if paid every two weeks). From a dollar-cost averaging perspective, more frequent investments (like weekly) can sometimes slightly enhance the averaging effect, but monthly is perfectly effective for most investors. Consistency is more important than the exact frequency.
How to link a bank account to Fidelity for automatic investments?
You'll typically link your bank account during the initial account setup or by going to the "Transfers" or "Account Features" section on Fidelity.com and selecting an option to "Link a Bank Account" or "Add a Bank." You'll need your bank's routing and account numbers, and Fidelity will likely initiate small "test" deposits to verify the account.
How to handle insufficient funds for an automatic investment on Fidelity?
If there are insufficient funds in your linked bank account or Fidelity core position on the scheduled investment date, the transaction will generally fail. Fidelity may notify you. You'll then need to manually make the transfer or investment, or adjust your recurring plan. It's crucial to ensure funds are available to avoid missed investment opportunities.
How to view a history of my automatic investments on Fidelity?
You can view your transaction history by logging into your Fidelity account and navigating to your account activity or transaction history. This will show all your buy and sell orders, including those initiated by your automatic investment plan.
How to set up automatic investments in an IRA (Roth or Traditional) on Fidelity?
The process is generally the same as for a regular brokerage account. When setting up the recurring investment, simply select your Roth IRA or Traditional IRA as the target account. Ensure you are aware of annual contribution limits for IRAs.
How to find the minimum investment amounts for Fidelity mutual funds in automatic plans?
For Fidelity's own mutual funds, the minimum for recurring investments is typically $10. For non-Fidelity mutual funds, the minimums can vary and are usually outlined in the fund's prospectus or on Fidelity's fund research pages.
How to automate investments into a Fidelity Basket Portfolio?
You can automate investments into a Fidelity Basket Portfolio (formerly FidFolios) just like individual stocks or ETFs. When setting up your recurring investment, select "Fidelity Basket Portfolios" as the security type and choose the specific basket you've created. This allows you to automatically contribute to a diversified, custom-built portfolio.