Automatically invest at Fidelity

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Raspberry-503
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Automatically invest at Fidelity

Post by Raspberry-503 »

I automatically transfer money from my checking account to my brokerage account every month.
The money ends up in the Core position, and currently so do the dividends from other funds.

The thinking was that I can log in once a month, decide which funds are lagging, and invest accordingly to rebalance "opportunistically". The thing is, my monthly contribution is getting to be puny when compared to fund balances due to market fluctuations. I've been monitoring my 401(k) where I invest a fixed percentage of each contribution into my funds, and it's not getting out of whack enough to warrant rebalancing. (I use 20/5 bands portfolio-wide to make rebalancing decisions)

So in the spirit of being lazy, I changed dividends to be reinvested in the fund that generated them, but I can't figure out how to automatically invest the monthly transfer, say 70% in VTI and 30% in VT?

Similarly I have some international bonds (BNDX) in my IRA, and would like dividends from any fund in the IRA to get automatically invested in BNDX so I don't worry about buying it manually.

In addition to being lazy I would no longer have a need to log in monthly to invest, further reducing the opportunities to peek at balances.
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Artful Dodger
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Re: Automatically invest at Fidelity

Post by Artful Dodger »

Here’s from the Fidelity site. I’d just give them a call and let them know what you want to do.

Here are a few options:

Recurring investments from your paycheck
Your employer may offer the ability to set up direct deposit from your paycheck into multiple accounts. You can have part of your check sent to a bill-paying account and part to an investment account if that's available. Once the money is in the investment account you can move it into your investments or you may be able to set up automatic investments that could move the money into your funds for you.

A recurring transfer from your bank account
If your investment account is at a different institution, you can generally set up transfers on either end—from the bank or the investment account.

An automated investment plan in your investment account
At Fidelity, you can set up automatic investments into funds you already own in your brokerage, retirement, 529 savings, or other eligible retail Fidelity accounts. The investment can be made from the cash available in the account or by linking to a bank account.

A managed account
Once your account is set up, you can add extra money at any time—including through direct deposit or recurring transfers. Then the funds will be invested according to your investment plan. Managed accounts include everything from affordable robo advisor services to full-service investment advisors.
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Raspberry-503
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Re: Automatically invest at Fidelity

Post by Raspberry-503 »

Their representative in chat could not help me but gave me the phone number to call. The gentleman on the phone was helpful and I' documented what transpired in case it helps others trying to do the same thing:
- From the same menu that you would schedule an external transfer (from/to your bank account), you can add another transfer but select the origin to be Core position for that account instead of an external account, and set up automatic investment from there.
- The problem is that the automatic investment will only allow you to purchase Mutual Funds, not ETFs. So instead of automatically investing in VTI, I'd need to invest in VTSAX.

Everything outside of my 401(k), which only offers mutual funds, is invested in ETFs. I truly can't remember all the reasons why I switched from Mutual Funds to ETF years ago. For one thing, the fund is 1bpt higher ER (0.04% vs 0.03%) and still dirt cheap, but why pay more? I think ETFs allow you to buy partial shares but not Mutual Funds, again not too worried about it even if it means a hundred dollars or two stay in the Core position uninvested until the next automatic transfer. But I think I was told that ETFs are more tax-efficient than mutual funds, and since this is a brokerage, it matters a lot to me, and is something I need to understand better.

I don't like the idea of owning both VTI and VTSAX, why keep track of two fund balances when I could only track one? (I already have TLH partners in the mix for VTI)
Global100
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Re: Automatically invest at Fidelity

Post by Global100 »

At Fidelity the transaction fee to buy non-Fidelity mutual funds (e.g. VTSAX) is currently $49.95 per purchase. https://www.fidelity.com/trading/commis ... rgin-rates.

Avoid holding both VTSAX and VTI. A wash sale involving the two funds could be a mess to have correctly accounted on taxes (brokerage will not adjust). Here's an example attempting to account a wash sale involving VTSAX and VTI: viewtopic.php?p=4303513
mervinj7
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Re: Automatically invest at Fidelity

Post by mervinj7 »

Raspberry-503 wrote: Sun Sep 24, 2023 9:38 pm So in the spirit of being lazy, I changed dividends to be reinvested in the fund that generated them, but I can't figure out how to automatically invest the monthly transfer, say 70% in VTI and 30% in VT?
You can check out basket trading. $5/month flat fee to use it.
https://www.fidelity.com/direct-indexin ... portfolios
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Raspberry-503
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Re: Automatically invest at Fidelity

Post by Raspberry-503 »

wow thanks for pointing out the $50 transaction fee, it's insane!. Not interested in paying for this, IMO it should come for free, but I will simply continue to invest my core account manually every month.
hlfo718
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Re: Automatically invest at Fidelity

Post by hlfo718 »

Raspberry-503 wrote: Mon Sep 25, 2023 2:52 pm wow thanks for pointing out the $50 transaction fee, it's insane!. Not interested in paying for this, IMO it should come for free, but I will simply continue to invest my core account manually every month.
You can dollar cost into non Fido funds for $5, once you have the fund in the portfolio. I do this for a couple of Vanguard funds.
mervinj7
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Re: Automatically invest at Fidelity

Post by mervinj7 »

Raspberry-503 wrote: Mon Sep 25, 2023 2:52 pm wow thanks for pointing out the $50 transaction fee, it's insane!. Not interested in paying for this, IMO it should come for free, but I will simply continue to invest my core account manually every month.
It sounds like you are upset they charge a fee for buying non-Fidelity mutual funds at Fidelity. That's pretty standard practice at the major brokerages. Why not just buy a fidelity index fund and just auto invest an amount each month? It will be free. Unless there's a very specific vanguard fund you want in your allocation.
esar
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Re: Automatically invest at Fidelity

Post by esar »

Raspberry-503 wrote: Mon Sep 25, 2023 11:44 am
- The problem is that the automatic investment will only allow you to purchase Mutual Funds, not ETFs. So instead of automatically investing in VTI, I'd need to invest in VTSAX.
https://www.reddit.com/r/fidelityinvest ... mate_your/

Fidelity now allows automatic investment into Stocks and ETFs. This option is now available to small number of users and will be rolled out to all hopefully before year end. :sharebeer
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Re: Automatically invest at Fidelity

Post by LadyGeek »

Comments on Fidelity's automatic investment should be posted in: Fidelity introducing automatic ETF investing
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
edge
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Re: Automatically invest at Fidelity

Post by edge »

Easy to use Fidelity funds like FSKAX.

https://fundresearch.fidelity.com/mutua ... /315911693
Raspberry-503 wrote: Mon Sep 25, 2023 2:52 pm wow thanks for pointing out the $50 transaction fee, it's insane!. Not interested in paying for this, IMO it should come for free, but I will simply continue to invest my core account manually every month.
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Raspberry-503
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Re: Automatically invest at Fidelity

Post by Raspberry-503 »

Can you buy FSKAX at Vanguard or Schwab?
It might be overkill but in my brokerage I want investments that could be transferred in-kind between brokerages, and I know I can get Vanguard ETFs "everywhere". I have stayed away from Fidelity funds under the assumption they're not portable.
edge
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Re: Automatically invest at Fidelity

Post by edge »

Dunno. Don’t bother changing brokerage. Haven’t seen one better than Fidelity. If you worry about portability then use ETFs.
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Raspberry-503
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Re: Automatically invest at Fidelity

Post by Raspberry-503 »

edge wrote: Sun Nov 12, 2023 6:09 pm Dunno. Don’t bother changing brokerage. Haven’t seen one better than Fidelity. If you worry about portability then use ETFs.
Lol which is exactly where we started. Fidelity wasn't allowing automatic investments in ETFs :)
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anon_investor
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Re: Automatically invest at Fidelity

Post by anon_investor »

Raspberry-503 wrote: Sun Nov 12, 2023 7:03 pm
edge wrote: Sun Nov 12, 2023 6:09 pm Dunno. Don’t bother changing brokerage. Haven’t seen one better than Fidelity. If you worry about portability then use ETFs.
Lol which is exactly where we started. Fidelity wasn't allowing automatic investments in ETFs :)
You should be all good now that Fidelity allows for automatic investment of ETFs by dollar amount.
Bulletproof
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Re: Automatically invest at Fidelity

Post by Bulletproof »

I didn't want to start a new topic and thought this was a good enough one to put this in, but if I did start a new one it would be called "In defense of Fidelity Basket Portfolios™️".

I find BHeads to be totally over the top when it comes to letting the expense or tax tail wag the dog. This is no longer the days of 1.75%+ ER active equity mutual funds, and it's just amazing to me the contortions people here put themselves through for a single digit basis point or a $100 transfer bonus. Straight up some may investing choices with far bigger consequences just to save a bip or two. So, assuming this isn't your first year contributing to your Roth or taxable or whatever, it is totally reasonable to say the $5/mo charge for baskets can be completely inconsequential. You be the judge of your situation, of course, but I say it's a nothingburger for me and I know there are plenty here that have larger accounts than I.

So, with that said...

I really like these baskets and especially how they play ball with recurring investments, and include easy rebalancing. I don't NEED those things, I can code (though no direct API access at Fidelity, unfortunately), I am pretty good with excel, etc... but it's so easy with baskets. For a slice and dicer like myself it is really nice, especially how positions are grouped in baskets. For instance, i have a "Global Value", "Global Momentum", "Global Beta", "Trend Following" (was not a Johnny Come Lately on this, so I'll go ahead and high five myself), etc... even made a Hedgefundie basket for a small position in my Roth. And that thing is volatile (should be all caps) , now there's no second guessing or consulting emotions while rebalancing, one click and done. $5, totally worth it, and I'd bet a non-insignificant sum that both this feature gets further improvements and eventually becomes free within 3-5 years. Recommend for anyone not scared away by 3 bips, $5, or thinks it's ridiculous to go through the trouble of account transfers with lockup periods for $100 brokerage bonuses.
JohnSlackIV
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Re: Automatically invest at Fidelity

Post by JohnSlackIV »

Bulletproof wrote: Mon Apr 01, 2024 9:37 pm I didn't want to start a new topic and thought this was a good enough one to put this in, but if I did start a new one it would be called "In defense of Fidelity Basket Portfolios™️".
This is really interesting. The one click rebalancing could be worth the cost of admission alone, rebalancing manually can be a headache and I find myself sometimes putting it off.

Also the feature they call Smart Buys seems really useful. As you add money to a basket they can put more money in holdings where you’re underweight compared to your target allocation. Pretty handy in taxable accounts for tax efficient rebalancing.

I’m not ready to use this myself, my main rebalancing pain is doing it across my entire portfolio which this wouldn’t help with. But I feel like others here could find these features useful.

Seems like Fidelity is taking some of the best features of M1
Finance with this move. Smart.

Thanks for sharing.
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