Fidelity Review: A Deep Dive into Account Types, Costs, and Investment Options

Fidelity
Account Minimum	No requirements
Fees	Variable, $0 commissions for online US stock, ETF, and option trades
Account Fees	No annual fee
Margin Interest Rates	Up from 9.25%
Mutual Funds Offered	Yes
Demo Account	No
App/Platform	Mobile App, Wesite, and Active Trader Pro
Promotions	Not available yet

Fidelity Overview

Founded in 1946 in Boston by Edward C. Johnson, Fidelity remains a family-owned business to this day. Since 2014, Abby Johnson has served as Chairman and CEO. Fidelity provides investment channels for 99% of global capital assets and serves approximately 50 million individuals, 28,000 businesses, and 16,000 wealth management firms.

The company offers a broad range of services, including Financial Planning and Advice, Retirement Plans, Wealth Management Services, Trading and Brokerage services, and access to a wide array of trading assets.

Pros and Cons

How to Open a Fidelity Account?

Fidelity Account Types

Fidelity offers several account options to help individuals manage their investments, whether they prefer to handle it themselves or rely on Fidelity's resources.

The Brokerage Account allows users to engage in DIY investing, giving them control over investments in stocks, ETFs, mutual funds, CDs, and more. Fidelity provides free resources to assist in the process, helping users make informed decisions.

For those looking to save for retirement, the Roth IRA offers tax-free growth. This account provides the flexibility to balance long-term retirement goals with short-term needs, offering a strategic option for future planning.

The Rollover IRA is designed for individuals who have changed jobs or are nearing retirement. It allows users to consolidate their former 401(k) and workplace accounts into a single account, eliminating taxes and penalties during the transfer process.

Fidelity Demo Account

A demo account is an important step before starting real trading, but upon reviewing Fidelity, we found that it does not offer an option to open a demo account.

Open a Fidelity Account Step by Step

1. Opening an account at Fidelity is relatively simple and straight.
2. Select the account type you want—standard brokerage account, IRA, Roth IRA, etc.

   Will this be an individual or joint account?

   If you share the account, you will also need personal information (SSN, date of birth, etc.) for the joint owner.

1. Fill in your detailed personal information, including your name, date of birth, address, email, phone number, etc.

1. After completing these steps, you will create a username and password, and then Fidelity will guide you through funding your new account by transferring funds from a bank or another brokerage account.
2. If you have a 401(k) or other workplace retirement plan and Fidelity is the account administrator, you may already have a login and password. Fidelity will ask if you are already a Fidelity customer, and if so, this will simplify the process. You can log in to your account, and Fidelity will pre-fill some information in the application based on your profile.

Fidelity's Trading Costs

Fidelity has low trading costs, and its pricing is transparent, with many products and services offered for free.

Like other brokers, Fidelity eliminated commissions on U.S. stock, ETF, and options trades in 2019. However, options trading does incur a fee of $0.65 per contract, which is relatively high compared to other brokers (some of which have completely eliminated options contract fees).

Fidelity's standout feature is its account fees, or rather, the lack of them: Fidelity has eliminated nearly all account fees, including transfer fees and account closure fees that brokers typically charge.

Here are the trading fees for each type of instrument:

• Stocks: $0 for all online U.S. equity trades (any number of shares or trades)
• Options: $0, $0.65 per contract for all online options trades; $0 for buy-to-close orders of $0.65 or less
• ETFs: $0 for online ETF trades
• Bonds and CDs:
• New Issues: $0.01
• Secondary Issues: $1.00 per bond
• U.S. Treasury: Auctions and secondary issues online: $0
• Mutual Funds:
• Fidelity funds: $0
• No Transaction Fee (NTF) non-Fidelity funds: $0 on purchase; $49.95 on redemption if held less than 60 days
• Transaction Fee non-Fidelity funds: $49.95 per purchase; $0 on redemption

Margin rates are competitive and vary with market rates and debit balances. The current rate range is from 12.575% for debit balances of $24,999 or less to 8.25% for debit balances of $1 million or more.

Most account services are free, such as statements, confirmations, IRA withdrawals, and Roth conversions. Cash management services are also free, including bill pay, check returns and stop payments, bank checks, domestic wire transfers, etc. A few infrequent activities may incur fees, such as stock certificate transfers and shipping charges for $100, and a $50 forex settlement fee per transaction.

Fidelity Tradable Assets

Investors can access a variety of assets, including stocks, bonds, ETFs, and mutual funds, with commission-free ETF trading and a wide selection of Fidelity and mutual fund options.

Fidelity also offers trading in three cryptocurrencies, such as Bitcoin, Ethereum, and Litecoin. For customized investment strategies, they provide direct indexing, allowing investors to create portfolios that track specific stock indices. To ensure steady income, they offer fixed-income products, including bonds and CDs.

Additionally, the company allows traders to buy fractional shares, enabling investors to diversify into higher-cost stocks by purchasing part of a share instead of a full one. Fidelity also supports trading in American Depositary Receipts (ADRs), allowing investors to buy shares of foreign companies.

For retirement savings, they offer tax-advantaged accounts like traditional IRAs, Roth IRAs, and Rollover IRAs. For managing spending and saving, Fidelity provides cash management and high-yield savings options.

Furthermore, Fidelity offers 529 College Savings plans, Health Savings Accounts (HSAs) for medical expenses, and annuities for retirement income.

Mutual Fund Options

Fidelity was the first broker to introduce index funds with zero expense ratios to the market, including the Fidelity Zero Total Market Index Fund, Fidelity Zero International Index Fund, Fidelity Zero Large Cap Index Fund, and Fidelity Zero Extended Market Index Fund.

Investors can build a balanced (almost free) retirement portfolio solely with these zero-expense-ratio funds. Even Fidelitys index funds that charge a fee have much lower expense ratios compared to competitors.

Fidelity offers over 3,300 no-transaction-fee mutual funds and nearly 950 funds with expense ratios of 0.50% or lower. These funds are offered by Fidelity and other mutual fund companies.

Fidelity Trading Platforms

Fidelity has two trading platforms: Fidelity.com and Active Trader Pro. Both platforms are available for free to all customers. The Fidelity.com platform is available in both mobile and web versions.

1. Fidelity Mobile®
1. Recommended for: Beginner | Intermediate | Advanced
2. This easy-to-use, award-winning app consolidates all your investment activities in one place, allowing you to view, manage, and take action on your portfolio 24/7.
2. Fidelity.com
1. Recommended for: Intermediate | Advanced
2. Fidelitys website offers award-winning research, in-depth analytics, and idea generation tools, integrated with a user-friendly trading ticket.
3. Trading Dashboard
1. Recommended for: Advanced
2. The Trading Dashboard provides a comprehensive interface for tackling all your trading needs, featuring real-time market data, research ideas, and the ability to execute trades. Accessible on any browser.
4. Active Trader Pro®
1. Recommended for: Advanced
2. A full-featured platform offering real-time insights, dynamic visual analytics, and powerful trading tools. Available for download for enhanced trading capabilities.

Fidelity offers a customized mobile app for Fidelity Youth Accounts, designed for teenagers (ages 13 to 17). The app allows parents or guardians to monitor the teen's activity and provides access to stocks, ETFs (including fractional shares), and select Fidelity mutual funds, including zero-fee Fidelity Zero Funds.

Available to teens aged 13 to 17 with a parent/guardian's existing Fidelity brokerage account, the account has no subscription fees, no account fees, no minimums, and includes a free debit card. Teens can learn to spend, save, and invest with parental supervision. Once the teen turns 18, the account converts into a standard brokerage account.

Is Fidelity Safe?

You can rest assured, Fidelity is considered reliable as it is regulated by the top-tier FINRA in the US.

Investing always carries risks, and in light of recent bank failures, you may be wondering if your investments are safe. While brokerage accounts do not protect you from investment losses, they do offer other forms of insurance in the event of financial hardship, bankruptcy, or unauthorized transactions and theft.

Fidelity protects assets in two ways: through FDIC insurance and SIPC coverage, depending on the type of account.

• Fidelity offers an FDIC-insured Deposit Sweep Program for certain account types, including Cash Management, Health Savings Accounts (HSAs), and most IRAs.
• SIPC coverage protects assets held in brokerage accounts, including stocks, bonds, mutual funds, and money market funds.

The Securities Investor Protection Corporation (SIPC) insurance covers all brokerage accounts, while uninvested cash balances under $500,000 are insured by the Federal Deposit Insurance Corporation (FDIC). SIPC covers up to $500,000 in securities, while FDIC covers up to $250,000.

How to Withdraw Money from Fidelity?

When you want to withdraw funds from Fidelity, you have several options. The most basic option is a bank transfer, which is a common choice offered by nearly all brokers, and Fidelity is no exception.

You can also withdraw funds to certain types of e-wallets. At Fidelity, you can withdraw money to the following e-wallets: PayPal, Venmo, and Apple Pay.

Withdrawal Steps

Step 1: Log in to Your Fidelity Account

Visit Fidelity website and log in using your registration details.

Step 2: Go to “Manage Investments”

Once logged in, select “Manage Investments” from the top menu, then choose “Cash” to proceed.

Step 3: Withdraw Cash

Click “Transfer or Withdraw Cash,” select the account, enter the amount to withdraw, and choose “Bank Account” as the recipient.

Step 4: Choose or Add a Bank Account

If you have a linked bank account, select it. If not, choose “Add New Account,” enter your bank details, and complete the verification step.

Step 5: Review and Confirm

Review all details, click “Edit” to make changes, or “Cancel” to stop. Once satisfied, click “Confirm” to submit the request.

Step 6: Confirmation and Processing

Youll receive a confirmation once your request is processed. The funds will be transferred to your bank account within four business days if linked. Contact Fidelity Customer Service for assistance if needed.

Fidelity Withdrawal Fees

According to its fee and pricing guide, Fidelity's withdrawal fees for different types of investments may include transaction fees, fund manager fees, and currency exchange fees.

Conclusion

Fidelity is a strong choice for investors, offering a wide range of financial products, lower fees, and user-friendly platforms like Fidelity Mobile® and Active Trader Pro®.

Fidelitys robust security measures, including FDIC and SIPC coverage, further enhance its reliability.

However, it does not offer a demo account, which is something traders should carefully consider. If a diverse investment portfolio is a priority, it may still be worth considering.