Fidelity: My Mom Told Me Not to Put All My Eggs in One Basket
Written: Apr 12 '01 (Updated Apr 12 '01)
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Pros: Friendly customer service
Cons: Higher costs for trades
The Bottom Line: Extensive, diverse services. If you like commodities, metals, bonds, the unusual, this may be the brokerage for you.
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Diversification! If you are going to play the market, why put all your hard earned money into a handful of stocks when you can spread the risk with mutual funds? That is one of the selling points of Fidelity Brokerage. As well as offering stocks, they have their own family of mutual funds. I started out with mutual funds, then got into stocks and now am undecided which is best for me.
Possibly it is the professional handling of my money by folks who know a heck of a lot more than I do, and who get paid to keep on top of an ever changing market. This is CLEARLY a more diversified brokerage than Ameritrade is. Also, they seem more helpful, are willing to talk more about generalities, more about the market than Ameritrade. Use Ameritrade if you know what you want, Fidelity if you need a little handholding or are new.
Sector funds When you think that computers, or energy services or insurance is the wave of the future, you can invest in a fund that only offers stocks within that one sector, or type of business. The load, or fee for this transaction is 3%. This is less than another fund family, Waddell and Reed, charges for their purchases of mutual funds, which is 5.5%. There are about 40 sector funds in the Fidelity family of funds.
In House Funds Fidelity has over 140 different funds of their own, including the funds listed above. The nonsector funds do not have a sales charge. In addition to the funds which are in the Fidelity family, they also handle over 1400 funds which can be purchased through them. That way, instead of receiving many different statements, such as I do, you only get one statement per quarter.
General funds As well as handling sector funds, Fidelity offers funds which specialize in international investing, growth, income and growth as well as index funds, among many others.
Stocks As well as mutual funds, you can also purchase stocks through them. For $25 service fee, you can purchase up to 1,000 shares plus 2 cents for each share above 1,000. If you wish a representative to assist you activate your trade, (NOT just to speak with him/her) that will cost $59.00. If you wish limit orders, they will cost an additional $5.00. IF you are a PREFERRED customer, with over 12 trades over the past 12 months, online trades are only $14.95 plus 2 cents for any shares over 1,000.
As well, you can purchase various bonds and "commercial paper" from them. Treasury bills and Certificates of Deposit are available too. Rather than possibly bore the reader with all the facts, figures and details, they are available at:
http://personal300.fidelity.com/accounts/services/content/ultraservice.shtml.tvsr
With this brokerage (I have accounts with several - a couple of which won't advertise here, Waddell and Reed and TIAA/CREF)I tend to have sector funds. Some of my fund include:
Select Electronics
Select Health Care
Select Regional Banks
Select Health Care
Select Biotech
among others.
Select Electronics has been my shining star over the past five years, although it has pulled back significantly over the past year. At one point, I was up over 300% with it. I invested in Select Biotech just at its height a year ago in February and it is selling for about 1/2 of what it did back then. Live and learn not to chase the hottest sectors.
Most of my money is in IRAs and the minimum is $500 per account for retirement accounts and $2500 for non-retirement accounts. The fee for the Select family of funds is 3%. There is EXTENSIVE information on their funds, most of which is supplied by Morningstar. This includes a distribution schedule, highs and lows for various timeframes, gains/losses for various time frames, capital gains information, dividends, etc.
I have only touched upon a few of the functions that Fidelity offers. Probably most important for the average person, such as myself, is diversification and friendly service. This may be the brokerage for you. Fidelity is NOT publicly traded and I do NOT own shares in this company because of this. My brother uses Fidelity, and he hasn't done too bad over the years.
For information on another one of my brokerage services you may find information on Ameritrade at this link:
http://www.epinions.com/content_17422257796
Thanks!
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