Opening an account and funding it

To invest with Fidelity, you first open an account on their website or by phone, then deposit money into it. Fidelity offers several account types — a standard brokerage account (which has no contribution limits), a traditional IRA, a Roth IRA, and others — and the type you choose depends on whether you want tax advantages now or in retirement.

Once your account is open, you fund it by linking a bank account and transferring money, or by mailing a check. Fidelity does not charge account maintenance fees on most brokerage accounts. After the money settles (usually one to three business days), you can begin placing trades.

Key Takeaways

  • You can open a Fidelity account online in about 10 minutes by providing your Social Security number, address, and employment information.
  • Fidelity offers commission-free trading on stocks, exchange-traded funds (ETFs), and most mutual funds, meaning you pay no fee to buy or sell.
  • You can invest in individual stocks, ETFs, mutual funds, or a mix of all three depending on your comfort level and goals.
  • Fidelity's website and mobile app let you place trades yourself, or you can speak to a representative for guidance on what to buy.
  • Your first trade can happen within days of opening your account, as long as your deposit has cleared.

Choosing what type of account to open

A brokerage account is the most straightforward. You deposit money, invest it however you want, and can withdraw it whenever you want without penalty. There is no annual contribution limit. You will owe taxes on any gains when you sell, and on dividends paid to you during the year.

A traditional IRA lets you contribute up to a set amount per year (the limit changes annually). Money you contribute may be tax-deductible depending on your income and whether you have a workplace retirement plan. You do not pay taxes on gains until you withdraw money in retirement, typically after age 59½. Withdrawals before that age usually trigger a 10 percent penalty plus income tax.

A Roth IRA works differently: you contribute money that has already been taxed, but your gains and withdrawals in retirement are tax-free. The annual contribution limit is the same as a traditional IRA. You can withdraw your contributions (not gains) at any time without penalty.

If you are self-employed or own a small business, Fidelity also offers SEP IRAs and Solo 401(k)s, which allow much higher annual contributions. A representative can walk you through which account makes sense for your situation.

Understanding stocks, ETFs, and mutual funds

A stock is a share of ownership in a single company. When you buy Apple stock, you own a tiny piece of Apple. Stock prices move based on company performance and investor sentiment. Some stocks pay dividends — quarterly payments to shareholders. Stocks are the most volatile option, meaning their price can swing significantly day to day.

An exchange-traded fund (ETF) is a basket of many stocks or bonds bundled together and traded as one unit, like a mutual fund. An ETF might hold 500 different company stocks, so buying one ETF spreads your money across many companies instead of betting on one. ETFs trade during market hours like stocks do, and many pay dividends. They are less volatile than individual stocks because losses in one company are offset by gains in others.

A mutual fund is similar to an ETF — it holds many stocks or bonds — but it trades only once per day after the market closes, not throughout the day. Some mutual funds are actively managed, meaning a fund manager picks which stocks to buy and sell. Others are index funds, meaning they straightforward track a market index like the S&P 500. Index funds typically have lower fees because no one is actively managing them.

Most beginners start with ETFs or index mutual funds because they offer when ready diversification — your money is spread across many companies — without requiring you to research individual stocks.

Placing your first trade

Log into your Fidelity account and click "Trade" or "Invest" (the exact wording varies by platform). You will see a search box where you type the stock ticker symbol — a short code like AAPL for Apple or VOO for the Vanguard S&P 500 ETF. Once you find what you want, you enter the number of shares you want to buy and review the order.

You can place a market order, which buys when ready at the current price, or a limit order, which buys only if the price drops to a level you set. Market orders fill right away; limit orders may never fill if the price never reaches your target. For a first trade, a market order is simpler.

After you confirm, the order goes through when ready during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). If you place an order after hours or on a weekend, it waits until the market opens. You will see the trade in your account history when ready, and the shares appear in your holdings within one business day.

Using Fidelity's tools and research

Fidelity's website includes research tools, stock screeners, and educational articles about investing. You can read analyst reports, see historical price charts, and compare different investments side by side. The mobile app lets you check your holdings and place trades from your phone.

If you do not want to pick investments yourself, Fidelity offers robo-advisors — automated services that build and manage a portfolio for you based on your age and risk tolerance. You answer a few questions about your goals, and the robo-advisor suggests a mix of ETFs and rebalances it automatically. This costs less than hiring a human financial advisor and requires no decisions from you after setup.

You can also speak to a Fidelity representative by phone or chat to discuss what to invest in. Representatives cannot tell you what to buy, but they can explain how different investments work and answer questions about your account.

Understanding fees and costs

Fidelity charges no commission on stock trades, ETF trades, or most mutual fund trades. This means you pay nothing to buy or sell. However, some investments carry internal costs called expense ratios — a small annual percentage that the fund company takes to cover management and operations. An ETF with a 0.03 percent expense ratio costs you $3 per year for every $10,000 invested. Index funds typically have very low expense ratios; actively managed funds are higher.

If you buy mutual funds outside Fidelity's own lineup, you may pay a transaction fee. Fidelity also charges fees for certain services like wire transfers or account closing, though these are rare for typical investors. You can see all fees upfront before you complete any trade.

Moving money in and out of your account

You can deposit money by linking your bank account and transferring electronically (usually free and takes one to three business days), or by mailing a check. Withdrawals work the same way — you request a transfer back to your bank, and it arrives within a few business days. You can also request a check by mail.

If you are withdrawing from a traditional IRA before age 59½, you will owe income tax on the withdrawal plus a 10 percent penalty (with some exceptions). Roth IRA withdrawals of contributions have no penalty, but withdrawals of gains do. Brokerage account withdrawals have no restrictions or penalties.

Frequently Asked Questions

How much money do I need to open a Fidelity account?

There is no minimum deposit required to open a brokerage account or IRA with Fidelity. However, some investments have minimums — for example, some mutual funds require a $2,500 initial investment. You can open an account with $1 and buy fractional shares of ETFs or stocks, meaning you can invest any dollar amount, not just whole shares.

Can I lose all my money investing through Fidelity?

Yes, if you invest in individual stocks, the company can go bankrupt and the stock can become worthless. Diversified investments like ETFs and index funds reduce this risk because losses in one company are offset by gains in others. Fidelity itself is a brokerage firm holding your money in custody — if Fidelity fails, your account is protected by the Securities Investor Protection Corporation (SIPC) up to $500,000.

What is the difference between a market order and a limit order?

A market order buys when ready at whatever the current price is. A limit order only buys if the price drops to a level you set. Market orders fill right away; limit orders may never fill if the price never reaches your target. For most beginners, market orders are simpler and more reliable.

Do I have to pay taxes on my investments right away?

In a brokerage account, you owe taxes on gains when you sell and on dividends each year, even if you do not withdraw the money. In a traditional IRA, you owe no taxes until you withdraw in retirement. In a Roth IRA, you owe no taxes on gains or withdrawals in retirement. The account type you choose determines when taxes are due.

Can I change my mind and sell my investments?

Yes, you can sell any investment at any time during market hours. You will receive cash in your account within one business day. If you are selling at a loss, you cannot deduct that loss from your taxes in a Roth IRA, but you can in a brokerage account or traditional IRA. There are no penalties for selling in a brokerage account; selling in an IRA before age 59½ may trigger penalties depending on the account type.