Fidelity Futures Trading
Fidelity does not offer futures trading at this time. As an alternative, we recommend
Webull.
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Managing Multiple Accounts With Fidelity
Fidelity is a mutual fund company, so customers can open many different accounts under one umbrella. This makes it a “one-stop shop.” Other services provided by Fidelity include mutual funds, traditional IRAs, 529 college savings plans, and other financial services (see website for details). Fidelity clients can open one web page and view several accounts at once. This makes it easy to transfer money between accounts and manage funds with one service. For both experienced and new investors, this is a great feature.
Website Interface
The website is easy to use and visually appealing. There are several graphs and charts that show an account’s performance or how money is being allocated. Clients with multiple Fidelity accounts can easily break down the accounts to see either a summary of all accounts or each account individually.
Fidelity’s website is user-friendly. They also make it easy to contribute to an account without ever having to pick up a phone. If transferring between banks or other accounts, clients can set up an electronic transfer, which can also be automated.
They offer a detailed analysis page for each specific account, which is very helpful. This analysis page includes four categories: asset allocation, top positions and rankings, stock analysis, and income analysis. For beginners, they offer simple “checks” if they believe an account’s funds are allocated correctly or “exclamation marks” if they don’t. If any of the categories do not match their recommendations, they provide detailed information on how to fix the issue. If customers want to learn more, they offer several links, including: “Why this matters” and “Show me what I can do about this.” This is great for the average user. However, the website tells you what to do but not how to do it. There are no step-by-step instructions or video tutorials on how to solve a problem. Instead, Fidelity uses more advanced financial terms that may be difficult for the average person to understand.
Fees and Rate of Return
There is a minimum of $2,500 to open the account, but there are no minimum annual contributions after that. There are no additional fees that are paid out of pocket. For clients who are interested in trading, there is a $0 trading fee for unlimited online U.S. trade equities.
Fidelity’s expense ratio (the annual fee that all funds charge their shareholders) is fairly competitive. For example, a Roth IRA aggressively saving for a 2046-2050 retirement had an expense ratio (gross and net) of .75% ($7.50 per $1,000), which is on the lower end of the spectrum. However, this account lost 3.21% in its first year, which was in line with Fidelity’s predictions.
Fidelity’s margin rates are high, starting at 9.325% for most clients. However, for investors with very large debit balances, the margin interest rates can drop as low as 5.00%.
Fidelity charges a 0.35% annual fee for its robo-advisory service and requires the same minimum to start the service.
Setting Up An Account
Setting up an account with Fidelity is fairly easy. It takes most users about ten minutes to fill out the information boxes asking for the user's name, address, etc. There is no fee to open an account.
Most users can set up authorization for Fidelity to make withdrawals from their bank accounts by simply filling out an electronic form. For customers with small or new banks that are not on Fidelity's list of pre-approved banks, they can print out a paper form and mail it in.
Once the authorization is complete, a user can make a deposit or withdrawal anytime by clicking on "transfer" from the Portfolio Summary Page and selecting where to move money to and from using the drop-down menu.
Research
After opening an account, users gain access to a wide variety of information for investment research. For example, each stock’s page shows the bid/ask spread, day range, volume, and dividend yield. It also displays news aggregated from across the web that is relevant to the particular stock being viewed. For example, visiting the page for Newmont Mining brings up news about the stock market in general, the price of gold, and recent events affecting some of Newmont's competitors.
Buying Stocks And Bonds
Buying an asset is as easy as clicking on "buy" from the stock or bond's page. The commission for stocks is $4.95 per trade, while for bonds it is $1 per bond. Options cost $0.65 per contract.
Some bloggers have claimed that Fidelity requires a minimum balance for its brokerage accounts. However, this is not true. As long as the user chooses a plain, vanilla "individual" brokerage account, there is no minimum balance. To buy a share of a company, for example, the user just needs to have enough cash in the account to buy at least one share.
For investors willing to take more risk for greater reward and with more than $150,000 worth of capital, Fidelity allows them to borrow cash to buy securities on margin. For this service, it charges rates of between 4%-8.8%, depending on the current value of the user's assets and how much of that value has already been used for previous margin requirements.
Select Commission-Free ETFs
One of the best features of a Fidelity Brokerage Account is the ability to buy a wide variety of Fidelity and iShares exchange-traded funds at 0% commission. For users with a small amount of capital, these commission-free trading opportunities can often make the difference between being able to invest or having to sit on cash instead.
Here is a list of just a few of the ETFs that are available to be traded commission-free:
- iShares Core S&P 500 ETF (IVV) (similar to the SPDR S&P 500 ETF)
- Fidelity Core Dividend ETF (FDVV)
- Fidelity Dividend ETF for Rising Rates (FDRR)
- Fidelity MSCI Energy ETF (FENY)
- Fidelity MSCI Financials ETF (FNCL)
- Fidelity Total Bond ETF (FBND)
- Fidelity Limited Term Bond ETF (FLTB)
- Fidelity NASDAQ Composite Index (ONEQ)
- iShares Core MSCI Total International Stock (IXUS)
- iShares MSCI Global Gold Miners (RING)
Portfolio Analysis Tool
Another great feature of a Fidelity brokerage account is the Portfolio Analysis Tool. A user can set up this tool with goals to track. The computer will then alert the user if something in the portfolio is inconsistent with those goals. For example, if the user is concerned about not being properly diversified across sectors, the computer will notify them whenever the percentage of the portfolio in one sector rises above a certain threshold.
Customer Service
Fidelity provides a comprehensive set of help files covering most aspects of the brokerage platform, along with a virtual assistant that allows users to type questions in English for answers. If these solutions do not resolve the user's questions, 24/7 telephone service is available toll-free. Most users find the telephone operators to be friendly and helpful.
Disadvantages To Using a Fidelity Brokerage Account
The biggest disadvantage of using Fidelity is that it is a "discount" brokerage. This means it offers little in the way of advice for investors with large amounts of capital who don't have extensive knowledge of financial markets. While Fidelity offers plenty of ways to research market trends, the user is mostly on their own when deciding what to buy or sell.
To be fair, Fidelity does offer some accounts with higher fees that give users access to expert opinions. But, like other discount brokerages, this is not what Fidelity specializes in. So, a user looking for robust investment consultation services may be better off going with a full-service broker like Merrill Lynch or Morgan Stanley.
Fidelity Summary
A Fidelity brokerage account can be very useful for the investor who wants a lot of "hands-on" experience trading and doesn't require much advice. It provides robust research tools, computerized portfolio analysis, and very low to non-existent commissions.
For users who want plenty of expert human advice, other brokers or other types of accounts may be a better fit.
Updated on 8/14/2024.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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