What can I do with my Fidelity account?

**Petunia 100** · 07-22-2011, 01:02 PM

Originally posted by jbrother View Post

Recently graduated with a Bachelors degree and landed my first job. Suddenly I have a Fidelity account opened in my name by my employer and they automatically put money into it. It's pretty small right now but I want to know what I would be able to do with it to make my money in there worth it.

To the best of my knowledge, my money is in a very low interest account but my employer mentioned to me that there are ways to put it into a more "aggressive" setting that has more risks but generates more interest. What does this mean and how can I learn more about these type of accounts?

I've become quite interested in the idea of investments ever since stumbling upon this site and as a side question to my main question, what would be a suggested route for someone with zero knowledge to learn more about investing with very medium income.

To any with advice, thank you.

Is this a Simple IRA account?

Since your account is at Fidelity, you likely have your pick of Fidelity's funds. A balanced fund or target retirement fund (Fidelity calls them "Fidelity Freedom") is a great way to start.

Right now you are probably in a money market fund which is not a good long-term choice. You want to put your long-term dollars into stocks and bonds. You can do that with a single diverse mutual fund (balanced, target retirement).

If you want to learn more about investing, I recommend Morningstar's free "Investing Classroom".

Investment Education, Investing 101, Investment Basics, Investment Classroom, Learn to Invest | Morningstar

**mcfroggin** · 07-24-2011, 06:40 AM

I would exchange your current investments there (likely a money market account) into a variety of mutual funds over time. My employer has the same set-up for me. Every month or two I move the deposited money into mutual funds. Fidelity has a variety of funds that include those managed by Fidelity and many more.

**gambler2075** · 07-24-2011, 07:39 AM

Originally posted by jbrother View Post

Recently graduated with a Bachelors degree and landed my first job. Suddenly I have a Fidelity account opened in my name by my employer and they automatically put money into it. It's pretty small right now but I want to know what I would be able to do with it to make my money in there worth it.

To the best of my knowledge, my money is in a very low interest account but my employer mentioned to me that there are ways to put it into a more "aggressive" setting that has more risks but generates more interest. What does this mean and how can I learn more about these type of accounts?

I've become quite interested in the idea of investments ever since stumbling upon this site and as a side question to my main question, what would be a suggested route for someone with zero knowledge to learn more about investing with very medium income.

To any with advice, thank you.

Personally, I think that trading is a losing proposition for the vast, vast, VAST majority of people, and they shouldn't even bother trying. In my case, I had spent many thousands of hours learning to trade, and I sacrificed alot of time I could have spent snowboarding or traveling, or whatever, to get here. However, it has essentially allowed me to semi-retire in my mid 30's, but nothing is guaranteed. It takes a long time for someone to overcome their psychological weaknesses and trade profitably, and I am pretty sure that many people lack the temperament to ever be successful. Heck, I've even found that my non-trading friends, who want me to hold their (trading) hand, can't even resist the temptation to buy high and sell low, even when I am telling them exactly what I am doing.

So, unless you have about 10,000 hours and 5-8 years to spend trading, I think you shouldn't even bother.

If you still insist on trying to trade, then start out paper trading for 6 months to see how you do.

Paper trading - Wikipedia, the free encyclopedia

If you are successful, then maybe move to real money, but realize that it is 100X easier to papertrade than to have real money on the line. It took me a long time before I became basically unemotional, whether or not I lost 50,000$ some day or made 250,000$... I actually think I did pump my fist and say 'YES!' once, when I made that much on a trade, but that was it. Then it was off to find the next trade.

‪guns n roses welcome to the jungle with lyrics‬&rlm; - YouTube

g

**krantcents** · 07-24-2011, 08:26 AM

This sounds like a 401K account. I would develop an asset allocation I am comfortable with and fund your account. You can always start with a total stock market index.

**jpg7n16** · 07-24-2011, 09:00 AM

If your account's at Fidelity, they have some resources to help you out:

https://guidance.fidelity.com/retirement-guidance

If you're trying to develop your own asset allocation:

Asset Allocator

Then just pick mutual funds to match that allocation.

Gambler - I don't think OP was considering daytrading in the account, I think it's just that his money must have been going into some money market account, and his employer was letting him know that there are other mutual funds he could use, but that those funds carry more risk and potentially higher returns (true statement).

**gambler2075** · 07-24-2011, 10:22 AM

Originally posted by jpg7n16 View Post

Gambler - I don't think OP was considering daytrading in the account, I think it's just that his money must have been going into some money market account, and his employer was letting him know that there are other mutual funds he could use, but that those funds carry more risk and potentially higher returns (true statement).

I know that everyone starts out thinking 'hey, this savings account is getting me 1% (or whatever it is)... I want more than that!' and then it gets to attempts to market-time whatever Vanguard fund they are in. Then it goes to buying PFE because, hey, Pfizer can't go down anymore, right? They make some great drugs!

... Then it goes to buying something like KV.A at 7$, or 12$, then the next thing you know, you have blown up your account.

KV/A - SharpCharts Workbench - StockCharts.com

Trading is a slippery slope and I would posit that most people get sucked into it without even thinking they are going to trade... but in the end, they lose it all.

‪Linkin Park-In The End Lyrics‬&rlm; - YouTube

g

**SeanH** · 07-24-2011, 12:57 PM

If its a Fidelity 401k, the easiest thing to do would probably be to pick a target date fund (2040 or 2050), bump your contribution up to at least 15% and then work more and spend less. I have Fidelity and I'm able to do a 401k-pretax or a 401k-ROTH. You can contribute up to $16,500 to your 401k.

One last thought: "I just want to give enough to get my company match" - Give more. Way more. I receive a match from my company - in their company stock which has to best (7 years). Perhaps some people get a better deal, but if your scenario is like my scenario then (1) do you really expect to be there long enough to receive a full match (2) how much exposure do you really want to your company? You are already employed by them so if things go sour you risk both your portfolio and your job.

**jpg7n16** · 07-24-2011, 01:15 PM

Originally posted by SeanH View Post

One last thought: "I just want to give enough to get my company match" - Give more. Way more.

Although I agree that someone saving for retirement should save more than the match (though not necessarily all in the 401k) - I don't see the OP ever stating that he only does the match, or making this quote in any of his 2 posts so far.

Where did that quote come from?? OP never made it...

**SeanH** · 07-24-2011, 06:07 PM

My apologies for the poor communication. I just meant it as an frequent idea (and a mistake of my past) and shouldn't have put it in quotes.

**jbrother** · 07-25-2011, 06:20 AM

Thanks for the advice on that. Being new at this I definitely got a little lost in your comments. So now I'm starting out my just researching the terminology that you all mentioned. Nobody in my family has ever spoken of trading/investing so this is a whole new world to me.

Again, thank you to everyone who responded. It's going to help me a lot as time goes by.

**jpg7n16** · 07-25-2011, 08:32 AM

Originally posted by jbrother View Post

Nobody in my family has ever spoken of trading/investing so this is a whole new world to me.

trading = effecting short term trades (buy/sell) in order to make a short term profit, based on short term information. this could be anywhere from buying and selling the same security on the same day (day trading), to buying and selling over the span of a few months (swing trading) - or somewhere inbetween.

In order to be a profitable trader, you need tons of experience, knowledge and practice. Gambler is pretty much the resident trader here at SA, so when people talk about being more 'aggressive' his mind jumps to trading.

But I don't think that's what your employer was talking about...

investing = effecting a long-term investment based on long term information for hope of a reasonable rate of return over a long period of time.

To this effect, you could just buy one stock/bond/mutual fund and hold it for a very long time, and you would be investing.

You are likely in a money market fund right now - which is pretty much (though not exactly) like a savings account at the bank (earns very little interest, very secure - can't lose much, won't make much). And it seems that your employer is advising a more 'aggressive' fund - which could be really just about any other fund out there.

It's called more 'aggressive' not because you would be trading, but because your asset allocation would go from 100% Cash --> X% Stocks/Y% bonds/Z% Cash.

The inclusion of stocks and bonds would make your portfolio riskier, and therefore more aggressive. Furthermore, stocks and bonds in general are expected (but not guaranteed) to make more over time than holding cash/money market funds.

I'd recommend reading the following books from your local library:
The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham
Morningstar Guide to Mutual Funds: Five-Star Strategies for Success by Christine Benz

**thefrugaltoad** · 07-25-2011, 11:53 AM

I would highly recommend looking into a Roth 401k since you are young and just starting to accumulate retirement assets. Once you reach age 59 1/2 you can make withdrawals tax free and you have access to your contributions in case of a financial emergency. Invest at least 10-12% monthly in a diversified portfolio of mutual funds. Fidelity is an excellent firm with lots of offerings, there website will have tools to help you choose the right asset mix for your needs.

Paul - The Frugal Toad

**Petunia 100** · 07-25-2011, 03:10 PM

Paul, penalty and taxfree withdrawals of contributions at any time are a feature of Roth IRAs, not Roth 401ks.

http://www.irs.gov/pub/irs-pdf/p4530.pdf

**thefrugaltoad** · 07-25-2011, 03:23 PM

Petunia,

By financial emergency I meant financial hardship per IRS regulations.

What can I do with my Fidelity account?