Fidelity Investments is one of the largest investment companies in the world and known for its comprehensive brokerage service. Fidelity aims to be your one-stop shop for all financial services and provides a plethora of investment products, including mutual funds, retirement accounts, stocks, exchange traded funds (ETFs), bonds, 529 plans, and more.
In this review, we’re going to cover Fidelity and what it offers you, the investor.
You’ll learn about:
- How Fidelity investment works
- How much Fidelity costs
- The fine print
- Pros and cons
- How Fidelity stacks up against the competition
Getting Set Up and Transferring Accounts
Opening a new account with Fidelity is designed to be a quick and efficient process. The process can be completed online, and it takes only a few minutes to fill out your basic information, assign a beneficiary, and set up ACH information to transfer money to and from your bank.
After everything is set up, you’ll be able to easily make deposits and trades.
If you need to transfer a brokerage account or roll over an existing IRA, or need another type of account, you can also set up everything online. You can speak with a customer service representative if you need additional assistance. The transfer process should take about a week on average if you are prompt about submitting all your documents and information.
Fidelity currently has an offer in which new customers who roll over their IRA to Fidelity can receive up to a 10% match. The match starts at 1% for transfers ranging from $10,000 to $49,000 and goes up from there.
Costs and Other Fees
There is a minimum deposit of $2,500 to open a brokerage account with Fidelity. There is no minimum deposit requirement for IRA rollovers. To open a Roth or traditional IRA, customers must either meet the minimum deposit requirement of $2,500 or set up monthly recurring deposits for a minimum of $200.
Options trades are $7.95 per trade plus $0.75 per contract.
Commissions for stock trades are $7.95 per trade (with unlimited shares and unlimited trades) and $32.95 for broker-assisted stocks and ETFs. Fidelity has more than 85 commission-free ETFs.
Fidelity also has more than 10,000 mutual funds. NTF (no transaction fee) non-Fidelity funds are $0 on purchase and $49.95 upon redemption (if held for less than 60 days). Some non-Fidelity funds come with transaction fees of $49.95 per purchase and $0 upon redemption. The mutual fund annual low-balance fee is $12 per fund if your mutual fund balance falls below $2,000.
Fidelity’s costs and fees are pretty clear and easy to find on its website, but it’s important to read the fine print and understand some of the firm’s specific rules and requirements.
For example, there is a $100 fee per stock certificate transfer and shipping. While there is no annual fee or inactivity fee, there is a $50 fee for closing your account.
There are also trading platform restrictions to consider. Fidelity has a few trading platforms and tools that may restrict some customers. For their Active Trader Pro platforms, customers need to trade at least 36 times in a 12-month period. There are other advanced tools on that platform, such as Recognia, which is only available to traders who place at least 120 trades per year.
Investors interested in online trading have quite a few options with Fidelity, but they need to make sure they fully understand the requirements and restrictions so they can optimize the platform they choose.
Like other online investment brokers, Fidelity has a mobile trading app that allows you to connect your mobile devices. With the mobile platform you can monitor and manage your portfolio on the go, manage your workplace accounts, trade, contribute to your IRA, and more.
Pros and Cons
Pro: Affordable trades. Even though they aren’t the lowest prices, Fidelity offers affordable pricing on trades.
Cons: Requirements and restrictions for traders. If you don’t trade often, you may not find Fidelity’s advanced platforms like Active Trader Pro (that requires you to make 36+ trades per year) useful.
Pro: Mobile platform. The mobile platform is convenient and allows you to manage your account on the go.
Cons: Investment minimum. Fidelity’s $2,500 minimum investment for a brokerage account is higher than other competitors, making it more difficult for investors to get started if they don’t have a lot of money.
Pro: Commission-free ETFs. Many of Fidelity’s funds are commission-free, and it has a wide variety of more than 85 ETFs. On the other hand, commissions are high ($49.95-$75) to purchase other non-Fidelity mutual funds.
Con: Annual fee. Customers who aren’t as active need to make sure their mutual fund balance doesn’t fall below $2,000 or they’ll be subjected to a $12 low-balance fee. It’s not much, but it can be avoided.
Pro: Great customer service. Fidelity has scored great reviews regarding their customer service, which is important to customers who have questions or may need support in the future. Fidelity offers phone support 24/7, a live chat feature, email support, and more than 180 branches. Customers who qualify for Fidelity’s Active Trader Services also get 24/7 support from trading specialists.
Other Online Investment Brokers
Scottrade is another online investment broker with more than 500 local branches. They offer services similar to Fidelity, except they charge a flat fee of $7 per trade, which is lower than Fidelity’s $7.95 per trade. If you place a trade through a broker, the commission is a flat $32. The opening minimum investment is the same as Fidelity at $2,500, and the minimum opening balance for a retirement account is $500.
Scottrade doesn’t charge for streaming quotes, and they offer more than 14,500 mutual fund options – 3,000 of which do not carry a transaction fee. Gaining access to Scottrade’s advanced platform (ScottradeELITE) requires meeting some steep requirements. For example, investors must have a $25,000 account balance or more than 9 stock/option trades during the previous three months.
TradeKing is another low-cost broker that provides flexible investment opportunities to customers. It offers $4.95 commission stock trades and $0.65 per contract. TradeKing also offers Forex trading, along with a $50,000 virtual account that lets you try it out before you take the reins on your own.
The best thing about TradeKing is that there is no minimum amount to open an account. On the other hand, the service charges an annual inactivity fee of $50 if your account is left dormant and no trades have been made for 12 months, and the combined value of your household accounts is less than $2,500. Both criteria need to be met in order for TradeKing to apply the $50 annual fee, but it is something to watch out for.
Vanguard is a leading provider of mutual funds and ETFs that are high-quality and low-cost. There are no commissions when you buy and sell low-cost Vanguard mutual funds and ETFs. However, if you buy and sell the same Vanguard ETF in a Vanguard Brokerage Account more than 25 times in a 12-month period, you may be restricted from purchasing that particular ETF for the next 60 days.
To open an IRA with Vanguard or roll over an existing IRA, the minimum deposit requirement is $1,000.
Vanguard’s Standard account, which is available to those with less than $50,000 in Vanguard accounts, charges $7 for the first 25 trades and $20 for subsequent trades. You need to have $50,000 to $500,000 in your Vanguard accounts in order to take advantage of unlimited trading.
Low-cost Online Investment Platforms
If you’re a novice investor looking for a way to experiment at a low cost, check out our review of low-cost and free investing platforms.
Who Fidelity Investments Is Best For
Fidelity is a top contender for online brokerage services. It’s a great option for more advanced traders who can take advantage of Fidelity’s platforms like Active Trader Pro, along with beginners, who will be able to rely on Fidelity’s quality and dependable customer service.
The retirement account matching program is an added perk if you choose to roll over your IRA.
If the minimum investment of $2,500 is doable for you and you prefer a large range of investment options and affordable trading fees, Fidelity is certainly worth looking into further.