Fidelity brokerage account - question about automatic investment

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jaypee
Posts: 25
Joined: Mon Dec 07, 2015 3:37 pm

Fidelity brokerage account - question about automatic investment

Post by jaypee » Thu Sep 20, 2018 6:49 pm

Hello Bogleheads,

I tried to call Fidelity about this multiple times, but it appears that don't have any representative available...

I recently opened a brokerage account at Fidelity and bought shares of

FIDELITY TOTAL MKT INDEX PREMIUM CL FSTVX
and
FIDELITY TOTAL INTL INDEX FD PREMIUM CL FTIPX

I would like to automatically invest every month into these 2 funds.
I already set up an automatic monthly transfer from my checking account to these mutual funds.

But a note on the automatic investment page says

"You must maintain an adequate balance in your brokerage core position
If the cash needed to fund your automatic investment is not available in your core position, your scheduled transfer will be skipped.
When this automatic investment is skipped for a second time, due to lack of available cash, the associated plan will be canceled.
"

I am not sure what that means.

Does it mean that I cannot buy the mutual funds shares directly and that I need to automatically transfer the money to the cash / core position account first, then manually purchase the share the funds?

Thank you in advance for your input!

Jay

dave_k
Posts: 240
Joined: Sat Dec 26, 2015 8:25 pm

Re: Fidelity brokerage account - question about automatic investment

Post by dave_k » Thu Sep 20, 2018 8:38 pm

I happen to have a Fidelity brokerage account and own those two funds, among others, but I have never tried any automatic investing. My interpretation of what they are saying is that the automatic investing will take money from your core account (cash/mm), and buy the designated funds with it, at designated amounts. If there's not enough in the core account with which to buy the funds, it will skip the purchase, and the second time it will cancel the automatic investment. If your automated transfers are large enough and timed to occur before each automated purchase, it sounds like it should work. You mentioned that you set up an automatic transfer from your checking account to these funds, but I assume you meant into the brokerage account, which should go into your core position. I could be wrong though, so you should verify with their customer service when they're open. I have found their customer service to be quite good.

jaypee
Posts: 25
Joined: Mon Dec 07, 2015 3:37 pm

Re: Fidelity brokerage account - question about automatic investment

Post by jaypee » Thu Sep 20, 2018 8:43 pm

Thank you Dave for your answer.

You can choose to transfer the funds to the core position or to the funds.
I set up the automatic transfer to the funds directly.
That's why I don't understand that note.

Best,

JP

dave_k
Posts: 240
Joined: Sat Dec 26, 2015 8:25 pm

Re: Fidelity brokerage account - question about automatic investment

Post by dave_k » Thu Sep 20, 2018 8:47 pm

Oh, that is strange then. I misunderstood. Worst case, it sounds like you may have to set it up as two separate transactions.

amitb00
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Re: Fidelity brokerage account - question about automatic investment

Post by amitb00 » Thu Sep 20, 2018 8:47 pm

In Vanguard, you can buy directly from your bank account. I wanted to buy shares in my fidelity brokerage and I was told that if I don’t have cash with them, it will be assumed I have bought on margin. I have to set up a transfer from my bank to Fidelity. Looks like similar thing is for automatic investments. They won’t buy, unless you have cash or your margin is enabled.

UpperNwGuy
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Re: Fidelity brokerage account - question about automatic investment

Post by UpperNwGuy » Thu Sep 20, 2018 8:47 pm

I seem to remember a similar thread not too long ago, and the conclusion of the discussion was that all transfers pass through the core account on their way from a bank account to a mutual fund, even when the transaction is described as buying a mutual fund with money from an outside checking account. Disclaimer: I have accounts at Vanguard and Schwab, but not at Fidelity.

jaypee
Posts: 25
Joined: Mon Dec 07, 2015 3:37 pm

Re: Fidelity brokerage account - question about automatic investment

Post by jaypee » Thu Sep 20, 2018 8:52 pm

UpperNwGuy wrote:
Thu Sep 20, 2018 8:47 pm
I seem to remember a similar thread not too long ago, and the conclusion of the discussion was that all transfers pass through the core account on their way from a bank account to a mutual fund, even when the transaction is described as buying a mutual fund with money from an outside checking account. Disclaimer: I have accounts at Vanguard and Schwab, but not at Fidelity.
That really sucks if it it the case.
Can anyone with a Fido account and automatic transfers set up to buy mutual funds confirm this?

Jay

SpaethCo
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Re: Fidelity brokerage account - question about automatic investment

Post by SpaethCo » Thu Sep 20, 2018 8:54 pm

That clause refers to automated investments within the account (ie, for those who direct depost into a brokerage account), or if the ACH transfer from your bank fails.

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HueyLD
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Re: Fidelity brokerage account - question about automatic investment

Post by HueyLD » Thu Sep 20, 2018 9:16 pm

Fidelity is open 24x7. The OP should give Fido a call.

jaypee
Posts: 25
Joined: Mon Dec 07, 2015 3:37 pm

Re: Fidelity brokerage account - question about automatic investment

Post by jaypee » Thu Sep 20, 2018 9:32 pm

HueyLD wrote:
Thu Sep 20, 2018 9:16 pm
Fidelity is open 24x7. The OP should give Fido a call.


I tried several times - seems like they are very busy (I hung up after waiting 15 minutes each time)

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HueyLD
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Re: Fidelity brokerage account - question about automatic investment

Post by HueyLD » Thu Sep 20, 2018 9:41 pm

Fido has a form for you to fill out for AIP. On that form, it clearly shows that you can invest directly into a mutual fund with money coming from an external source.

Here is the link to the form https://www.fidelity.com/bin-public/060 ... tments.pdf

If their printed form says so, the online form should say the same thing.

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welderwannabe
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Re: Fidelity brokerage account - question about automatic investment

Post by welderwannabe » Fri Sep 21, 2018 2:14 am

jaypee wrote:
Thu Sep 20, 2018 8:52 pm
That really sucks if it it the case.
Can anyone with a Fido account and automatic transfers set up to buy mutual funds confirm this?
Jay
I automatically buy a fund every month directly from my checking account. This works just fine.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

ryman554
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Joined: Sun Jan 12, 2014 9:44 pm

Re: Fidelity brokerage account - question about automatic investment

Post by ryman554 » Fri Sep 21, 2018 7:57 am

I really don't understand your question is. Here is the procedure for posterity:

Go to. https://digital.fidelity.com/ftgw/digit ... vestments/

Click on "Set up automatic investments"
Then choose "Transfer from external bank account"

Under "transfer to", select a mutual fund you own.

Choose the timing you want -- Fidelity is pretty good about this. Every month (or whenever), the funds are ECH pulled out of your bank account and credited one business day (I think) beforehand, the next business day, the securities are purchased. Done and done.

What is your question with this process?

jaypee
Posts: 25
Joined: Mon Dec 07, 2015 3:37 pm

Re: Fidelity brokerage account - question about automatic investment

Post by jaypee » Fri Sep 21, 2018 10:37 pm

welderwannabe wrote:
Fri Sep 21, 2018 2:14 am
jaypee wrote:
Thu Sep 20, 2018 8:52 pm
That really sucks if it it the case.
Can anyone with a Fido account and automatic transfers set up to buy mutual funds confirm this?
Jay
I automatically buy a fund every month directly from my checking account. This works just fine.
Ok thanks!

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