Is Fidelity Investments Safe?
After collapse of Lehman Brothers, Merrill Lynch, MF Global and other financial giants the sense of security many people had in most
of United States financial companies is gone. Maybe if the firm is considered "too big to fail" then one could put his or her savings there?
But who is "too big to fail"? With which companies could investors now safely invest their money and have a peace of mind?
Fidelity Investments is a firm that have never asked government for a bailout and came out of the Great Recession stronger than ever. It has been for many
years one of the five largest brokerage houses in the United States and it keeps growing.
You can read detailed review of their brokerage account under this link.
Is Fidelity Investments SIPC Insured And FINRA Regulated?
As a member of FINRA, Fidelity Investments has to comply with strict government imposed rules aimed to keep brokerage companies and their
clients' accounts safe and sound. As a member of SIPC (The Securities Investor Protection Corporation),
Fidelity provides insurance in case of the firm's bankruptcy on customer accounts of up to $500K, including up to $250K for cash balances.
So unless client's balance is over that amount he of she has nothing to worry about.
Is Fidelity FDIC Insured?
Fidelity Cash Management, Health Savings, and eligible IRA accounts have a Federal Deposit Insurance Corporation (FDIC, U.S. government
agency that insures cash deposits at FDIC member banks) insurance of up to $250,000 per account.
Fidelity BBB (Better Business Bureau) Rating
Fidelity Investments' BBB (Better Business Bureau) rating is C-. The details could be seen at
this link.
Out of 256 closed complaints at Fidelity's BBB page, 197 were problems with service, and 29 were billing issues. This is one of the lowest Better Business Bureau ratings for
brokerage houses.
Fidelity Investment Bankruptcy
Fidelity Investments is not in or close to bankruptcy. They have very profitable and sound business model.
Promotion
Current offer: Get 500 free trades with $100,000+ deposit.
Fidelity Review
Read detailed review of Fidelity account.
Fidelity is often cited as a good value in overall brokerage services. But investors might want to know how the broker performs in specific areas. This article will concentrate on the following four themes, and see how the firm's rivals compare.
Is Fidelity Good Company for Long-Term Investors?
The price of trading isn't that important to buy-and-hold investors because they don't trade that often anyway. They will instead want to see better customer service and financial planning resources. Fidelity certainly has both. The broker offers 24/7 customer service over the phone and through on-line chat. There are more than 180 Fidelity locations throughout the U.S. Fidelity associates have a history of being well trained, too.
Many financial services are also available from the broker, including free stock reports and portfolio
management services. Several other brokers, including Firstrade and Vanguard, don't have the same level of
investment services. Despite all of Fidelity's amenities, the broker manages to charge a low $4.95 commission.
Schwab, by comparison, charges $0, and TD Ameritrade customers pay $0.
Mutual funds are popular with long-term traders, and Fidelity has a good selection of them. The broker's fund screener generates 11,500 products. Of these, roughly 1,800 have neither load nor transaction fee. Merrill Edge has more no-load, no-transaction-fee funds, while Capital One Investing has fewer.
Fidelity performs fairly well here.
Is Fidelity Good Company for IRA's?
Retirement savers can open several different IRA types at Fidelity, including Traditional, Roth, SEP, SIMPLE, Rollover, Inherited, and Minor Roth varieties. There are ten IRA's at E*Trade, while Firstrade customers can choose from just five.
There is a lot of information on Fidelity's website devoted to retirement issues. Articles, videos, and self-guided courses cover topics such as creating a retirement plan and securing a stream of income. The broker also has several IRA calculators, including one that determines the amount of money that must withdrawn from a Traditional account per year under IRS guidelines.
A Fidelity IRA comes with no annual, low-balance, or maintenance fees. However, the broker does impose a $50 charge for closing an IRA. Some other brokers, such as TD Ameritrade, don't charge a fee to close a retirement account. On the other hand, E*Trade IRA's carry several fees, while an Interactive Brokers IRA comes with a $7.50 quarterly fee. Fidelity doesn't require a minimum deposit to open a retirement account. Schwab, by comparison, requires $1,000 to open an IRA.
Fidelity does pretty well here.
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Is Fidelity Good Firm for Beginners?
Beginning traders can benefit from a good supply of learning materials. The Fidelity website has an excellent selection of resources on a section called Learning Center. Here, investors will find a very large assortment of articles, videos, infographics, and courses on a wide range of topics. These include technical analysis, trading in options, and bond investing. There are also materials on issues beyond the world of securities, including college planning, commodities, and charitable giving. Fidelity's educational resources can be sorted by experience level, one option of which is beginner. Fidelity also operates live on-line webinars. An upcoming one discusses how to write covered calls. Older webinars are archived on Fidelity's website. Most other brokers, including OptionsHouse and WellsTrade, don't have nearly as much learning material.
Unfortunately, Fidelity does not offer paper trading. This would allow new investors the opportunity to practice trading before committing real money. TD Ameritrade and optionsXpress do offer this useful feature. On the other hand, Fidelity provides 84 ETF's that can be traded free of charge. This would be an opportunity for new investors to practice trading without paying commissions. Scottrade, by comparison, doesn't have any commission-free ETF's.
Fidelity seems adequate here.
Is Fidelity a Good Choice for Active Traders and Shorting Stocks?
Frequent traders especially need a low trading commission and a good platform. Fidelity's $4.95 charge for
stock and ETF trades. Fidelity's additional charge of 65¢ for derivative contracts is the industry norm.
Tradestation is lower at 50¢.
Fidelity does offer an advanced trading platform called Active Trader Pro. It comes with pretty steep requirements, though. At least 36 trades must be placed per year in order to access the software. This is a stricter requirement than Schwab, who only requires a $1,000 account balance. Merrill Edge requires 60 trades per year to use its trading software. TD Ameritrade is one of the few brokers to offer a sophisticated platform with no strings attached.
Shorting stocks requires margin, and Fidelity has competitive margin rates. A loan under $10,000 right now costs 8.825%. Currently, Capital One Investing customers pay 8.2%, and WellsTrade charges 9.5%.
Recap
Fidelity is a good overall value in financial services. The broker also does well in specific areas, especially those that require customer service options and educational resources.
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