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I think this info has been posted on a few different threads, but I thought I would combine it all into one. Some of the changes Fidelity has made:

- No more annual fees
-0.1% expense ratio on Index Funds (min of $10k investment for non IRA accounts)
-They have a money market fund (US Government Reserves) currently yielding 3.6% (this changes every day, has been getting higher)
- $100 bonus for opening an account with $10k (after I opened an account they sent me an e-mail about this)
- I also received 25 free trades for the year (I think this has expired)
-They also have United Miles
- You can alse use your account as a checking account. I know that may be an issue for some of the threads I have seen on here, for transfering money between money market funds. Because of this, you could easily use this to pay credit cards, etc.
- and of course the 1.5% CashBack card!

My point is, one can consolidate much of their finances with Fidelity (I'm a huge fan of this). The 3.6% might not be 4% but the money is very easy to move and at the same time since its already with Fidelity you can easily use it to buy stocks/mutual funds. Plus, if you factor in the $100 bonus that helps.

I should mention the min investment for the money market fund above is $2500. However, with Fidelity you setup a "Core account" this is where the money sits when it has just been transferred in, or you made a sale of some other investment. You can set this to be a Municipal fund (no federal taxes) that is yielding 2.4%. They also have some tax-tree state funds so if you live in one of those states its even better.

If you have over $50k in assets you get $10.95 trades (same price as Ameritrade). But when your money is not in investments its sitting in the core account (2.4% tax free) instead of with Ameritrade (0.1% last time I checked). So while Fidelity might not be the absolute cheapest/ have the highest rates in all areas, it is very competitive.

Just thought some FWers would find this of interest.

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I just signed up for Fidelity brokerage acct. Has anyone done it recently for the purpose of accumulating AA miles? An... (more)

vimana (Jul. 13, 2010 @ 5:03p) |

Well, that's damn annoying. Is schwab still giving out prepaid envelopes?

oopsz (Jul. 14, 2010 @ 1:35p) |

Yes

Moosy (Jul. 14, 2010 @ 2:04p) |

Link to $100 bonus (link dead)
To qualify to have $100 deposited into your account, you will need to open an eligible Fidelity account and fund it with at least $10,000. This offer is available for new households only.
Existing customers okay as well: "Existing Fidelity Brokerage customers must provide the information requested above and then deposit or transfer in at least $10,000 in assets to their individual or joint Fidelity Account."

Link to UA mileage offer
Link to AA mileage offer
Link to Delta mileage offer

Mileage Terms (common)
"Offer valid only for individual or joint Fidelity Accounts, personal trust accounts and business accounts opened online or by calling 800-369-8969. Offer is not valid for retirement accounts including IRA, Roth IRA, SEP and SIMPLE, 401(k), 403(b), etc.), some fiduciary accounts (including custodial accounts, estate accounts, etc.), college investment trust accounts, 529 accounts, annuities, accounts managed by Strategic Advisers, Inc., and clients of Registered Investment Advisors working with Fidelity Investments. Non-U.S. residents and those working for entities identified in NYSE Rule 350 are ineligible. "
"This offer is available for new households only. Limit one per household, per lifetime."
"Additional deposits to the eligible account will earn the customer a higher mileage award provided such deposits put the cumulative deposits above the next eligibility tier (up to a maximum of 25,000 miles). Initial and subsequent deposits must be made within 90 days of account opening. "

Fidelity mySmart Checking
Link
This is a seperate FDIC checking worth a look by anyone doing this deal. It has ATM Rebates, no min, no fees, 1.1%APY. The checking can be linked to the Money Market account and any withdrawal of the checking can trigger a sell of the money market.

"Double-dipping?"
If you qualify for both deals, you can get both the $100 bonus and the airline miles. Just register for both before opening your account. We think it tracks you by your SSN. [Double-dipping long dead]

What is a "core" account?
"Core" is Fidelity's term for a sweep money market. Unvested cash is swept in at the end of each day. You normally use these funds to purchsae investments (including other money market funds), but if you're lazy, you can just leave funds in the core money market as an investment.

How do I change my core account?
When creating a new account you are asked which core account you would like. You can select several different choices. The default is FCASH, which is a low-yielding taxable cash sweep. This is a crappy option. It's generally superior to select one of the tax-free municipal fund sweeps. Not only do they have a higher yield, but they are usually tax-free.

You can change this acount at any time. However, don't waste your time looking around the website for how to change this; you can't do this on the website. You must call customer service OR use the online chat feature found via Customer Service > Contact Us.

If your intention is to hold a bunch of money in a money market for a while, you can get slightly higher yields by buying a "transaction-based" money market fund. These are funds that you have to intentionally make "buy" and "sell" transactions to get into. A popular one is FSLXX, because it usually has the highest yield amongst taxable MMFs.

Select Money Market Portfolio 85 FSLXX
7-day AVG yield (slightly lower than APY, does not reflect compounding):
3.73% as of 10/31/05
3.99% as of 12/21/05
4.57% as of 04/04/06
4.90% as of 06/28/06
5.16% as of 08/31/06
5.34% as of 09/17/07
5.26% as of 10/12/07
4.90% as of 11/10/07
4.36% as of 01/29/08
3.93% as of 02/15/08
2.79% as of 05/03/08
2.46% as of 06/25/08
1.27% as of 10/30/08

If you are subject to AMT, you should consider the following:
Fidelity Municipal Money Market (FTEXX) - 5K min. investment if not core
2.20%(Tax Equivalent Yield up to 3.45%) as of 05/1/2008

If you are subject to AMT and live in California, you should consider the following:
Fidelity California AMT Tax-Free Money Market Fund (FSPXX) - 25k min. investment
2.29%(Tax Equivalent Yield up to 4.00%) as of 05/11/2008

Check the options available in your state, and check against your own tax bracket.

link to page with Fidelity MM options

Is this FDIC insured?
No. Money markets have an extremely small chance of losing money, but are not insured. Note that Fidelity can sell "brokered CDs", which really are FDIC insured. You can also buy US Treasury bills, notes, and bonds, either individually or in mutual funds. The underlying notes are backed by the full faith and credit of the US government.

Q: WHAT'S THE DEAL WITH CHECKWRITING OUT OF A MONEY MARKET?

Some people want to keep their money in a higher-yielding transaction-based mutual funds, like FSLXX, rather than the core. The question is, what happens if they to a withdrawal (check or ACH, doesn't matter), and there is not enough money in the core account? Well, here is what happens:

1) Funds are first deducted from the core account.
2) If your account has margin, the margin is used to clear the withdrawal.
3) If you do not have margin, or if you run out of margin, then any transaction-based money markets are sold to cover the difference*. There is no limit or fee for this.
4) Other stocks, bonds, or mutual fund holdings, are never automatically sold to cover a transaction, so the transaction would bounce.

* Even though the FSLXX details page says "no checkwriting", that's only for mutual funds purchased directly. We're talking about a brokerage account here, and the money market fund can be auto-sold within a brokerage account, with no fees or limits.

Fidelity Direct Deposit page
Fidelity Direct Debit page

The Fidelity routing number: 101205681

Update 01/30/2008
Bonus offer for each account is DEAD. Now they have added a clause %u201Cone per house hold%u201D. $100 bonus per customer or SSN. No multi dipping.

Update 02/01/2008 from the website fine print.
1 Offer rules and restrictions to receive $100:

Offer valid for individual or joint Fidelity accounts, personal trust accounts, and business accounts that select the taxable cash account as its core account. Offer is not valid for retirement accounts (including IRA, Roth IRA, Rollover IRA, Self-Employed IRA, SEP and SIMPLE, 401(k), 403(b), etc.), some fiduciary accounts (including custodial accounts, stock plan service accounts, estate accounts, etc.), 529 accounts, and accounts managed by Strategic Advisers, Inc.

timetosave said:
- $100 bonus for opening an account with $10k (after I opened an account they sent me an e-mail about this)

-They also have United Miles


Can/Did you combine these two offers?
Could you post your email/$100 link ?

I believe Fidelity charges $75 for purchasing Vanguard and other non-NTF mutual funds.

vickh said: timetosave said:
- $100 bonus for opening an account with $10k (after I opened an account they sent me an e-mail about this)

-They also have United Miles


Can/Did you combine these two offers?
Could you post your email/$100 link ?


I got the $100 and 25 free trades for a year. I found the United miles after the fact, and it says it can't be combined with other promos. The 25 free trades was old though and the new 25 free trades is for "active traders."

blues008 said: I believe Fidelity charges $75 for purchasing Vanguard and other non-NTF mutual funds.

Just like Vanguard charges for buying Fidelity funds. Vanguard and Fidelity both have a large selection of NTF (no transaction fee) funds. It seems that most large mutual fund companies don't allow free transactions when purchasing other large company's funds (ex. Vanguard, Fidelity, T. Rowe Price).

Your forgeting most funds have 12b-1 fees which are fees paid to other brokerage houses in form of an ongoing fee for selling there funds.

If you look at a funds total expensive ratio it includes the 12b-1 fee's. Some of the funds that are only avalible directly from the fund family themself do not pay a 12b-1 fee but yet there total expensive ratio could be higher or lower than ones to do pay a fee to be listed as many brokerage houses NTF mutual funds.

Here is an example of 3 funds in the same sector. 1 with this 12b-1 fee which can be purchased from almost all brokerage houses vs Fidelity own fund only which can only purchases direct from Fidelity. So just because your purchase a fund direct from a fund family does not mean you going to get a better deal or lower expensess ratio.

AGTHX = The Growth Fund of America - Total expeness ratio = .70%
FCNTX = Fidelity Contrafund - Total expensess ratio = .92%
VMRGX = Vanguard Morgan Growth Fund Investor Shares - Total expeness ratio = .44%

As you can tell Vanguard has the lowest overall expeness ratio and is only avalible direct from them but Fidelity's has a higher expensess ratio than The Growth Fund of America which can be purchases pretty much from almost ever brokerage houses NTF network. I am not saying any of the above funds are better than other just pointing out that expensess ratio can very from fund family to fund family just because you buy the fund direct from the family does not mean it has lower fee's over a fund purchased via brokerage houses NTF network.

their expense ratios are low on index funds, but the 10k min for every single index fund makes this more geared towards people with decent-sized accounts (5 index funds = $50k min)

why do you need 5 index funds?

vickh said:
Could you post your email/$100 link ?

https://scs.fidelity.com/products/stocksbonds/offers/100registration.shtml.cvsr

thanks, new households only.

previous fidelity offers gave the $100 for just adding $10k to your existing account, wish those were still around

dys,

manuel reported that he was able to fund an account for himself, one for his wife and a joint account, and received bonuses for each one. If you have more than one address, and if you don't have each of these different accounts, maybe you could still get the bonus.

Maybe even a trust account if you would have the need for one.

ETFnerd said: why do you need 5 index funds?Large cap index, mid cap index, small cap index, short term bond index, intermediate bond index, emerging growth index, foreign large cap index, ... to name a few reasons. Then, you can break down by style - value/growth.

,

pase0 said: ETFnerd said: why do you need 5 index funds?Large cap index, mid cap index, small cap index, short term bond index, intermediate bond index, emerging growth index, foreign large cap index, ... to name a few reasons. Then, you can break down by style - value/growth.

FFNOX should cover most of them.

c3 said: pase0 said: ETFnerd said: why do you need 5 index funds?Large cap index, mid cap index, small cap index, short term bond index, intermediate bond index, emerging growth index, foreign large cap index, ... to name a few reasons. Then, you can break down by style - value/growth.
FFNOX should cover most of them.
While both Vanguard and Fidelity (and others) offer funds made up of other funds, the advantage of doing it yourself is more granularity and flexibility. You get to set the allocations and you get to pick the asset classes. As most of the bulk of modern research suggests that small value stocks have a higher return (albeit at a higher risk) than your plain jane large cap (S&P500), leaving out small cap value stocks and overweighting in large caps will cause an investor to lose out on some returns. There are many books and articles on this where the authors show how you can actually reduce your risk and increase returns with proper asset allocation. Of course, there is something to be said for simplicity. You can just own one of the fund of indexes or lifestyle funds and be done with it. However, you should expect lower returns at a similar amount of risk in doing so.

Yes it's possible to beat index funds by doing your own allocation. The problem is, when you average everyone's returns, the reverse is true. So if you think you're better than the average Suzie, go for it. Otherwise if you think you're that average Suzie, save yourself time and go index.

How long do I have to keep $10K in the account?

"Accounts must be maintained for a minimum of six months. "
It didn't say if you need to keep the whole 10K for that long though.

stingyboy said: "Accounts must be maintained for a minimum of six months. "
It didn't say if you need to keep the whole 10K for that long though.


yes, but I'd like to get a confirmation from somebody who did this deal before, if it's ok to deposit $10K and then in a month or two withraw most of the $, leaving just a few hundreds in the account.

pase0 said: While both Vanguard and Fidelity (and others) offer funds made up of other funds, the advantage of doing it yourself is more granularity and flexibility. You get to set the allocations and you get to pick the asset classes. As most of the bulk of modern research suggests that small value stocks have a higher return (albeit at a higher risk) than your plain jane large cap (S&P500), leaving out small cap value stocks and overweighting in large caps will cause an investor to lose out on some returns. There are many books and articles on this where the authors show how you can actually reduce your risk and increase returns with proper asset allocation. Of course, there is something to be said for simplicity. You can just own one of the fund of indexes or lifestyle funds and be done with it. However, you should expect lower returns at a similar amount of risk in doing so.Seems like you are taking an active-passive approach. If you know which sector is going to outperform, why waste your time with the broad indices. Put all your money in the higher risk and reward index. Again, you need only one index, say small cap value. Why overweight when you know the winner, why not go all-in?

Also can you tell me which asset allocation gives me a lower beta and a higher expected return than the S&P500. Interested to know what the authors say.

pase0 said: small value stocks have a higher return (albeit at a higher risk) than your plain jane large cap (S&P500), ...
You can just own one of the fund of indexes or lifestyle funds and be done with it. However, you should expect lower returns at a similar amount of risk in doing so.

I don't understand.
Small caps have higher returm and higher risk.
Why would I get lower returns for the same risk if I went with S&P 500 index?

kmith said: pase0 said: small value stocks have a higher return (albeit at a higher risk) than your plain jane large cap (S&P500), ...
You can just own one of the fund of indexes or lifestyle funds and be done with it. However, you should expect lower returns at a similar amount of risk in doing so.

I don't understand.
Small caps have higher returm and higher risk.
Why would I get lower returns for the same risk if I went with S&P 500 index?

I guess S&P is not fully diversified?
We all know " High risks", "High rewards". But the risk here should not include the risk than can be reduced by diversification.
So if I can find an asset allocation that is more diversified than S&P 500. It is possible you may get lower returns for the same risk if you went with S&P 500 index. In another words, S&P 500 may not be fully diversified. I believe this maybe true becuase most of the S&P 500 index are large company. Another consideration is that S&P 500 index is the most popular index and the market may not so efficient.

Thanks for the clarification.
Just so I get it right: S&P 500 contain diversifiable risk which the market does not reward with higher return.

But why wouldn't Fidelity Four-in-One Index Fund do this diversification?
One could quibble about the exact ratios, but it seems to me that if you don't have enough money to invest in all 5 funds ($50,000 to avoid fees), this 4in 1 is a pretty good fit. It covers small cap and international as well as large cap.

ETFNerd, I'm not sure what you're advocating here? A diversified portfolio is going to have different asset classes, most likely including a couple different types of "index funds". Mine happens to have both index and actively managed funds. (I am embarassed to say I have yet to deal with ETFs!)

What it boils down to is the S&P500 index has outperformed other mutual funds 75% of the time. As for diversification, the S&P500 index funds are pretty well diversified by market segment (energy, financials, IT, industrials, consumer Staples, etc). There are some areas (utilities, telco, and materials) that are not as prevelant but for the most part its pretty diversified.

timetosave said: What it boils down to is the S&P500 index has outperformed other mutual funds 75% of the time.

we're not talking s&p500 vs. X, Y, or Z fund. we're talking s&p500 vs. a "diversified portfolio" (whatever that is ). *i* don't happen to know (i tend to believe a bit of international is good for the soul), found 2 different (contradicting) links quickly.

Dimensional Fund Advisors
Fidelity

Charts and numbers are of course always maliable. anyways, this is way OT so I apologize.

<edit>heh, also, sorry for interjecting myself into whatever conversation was going on here. "we" = me!</edit>

ETFnerd said: Seems like you are taking an active-passive approach. If you know which sector is going to outperform, why waste your time with the broad indices. Put all your money in the higher risk and reward index. Again, you need only one index, say small cap value. Why overweight when you know the winner, why not go all-in?

Also can you tell me which asset allocation gives me a lower beta and a higher expected return than the S&P500. Interested to know what the authors say.
I'm surprised to see so few have read books from Bernstein, Swedroe, etc on Modern Portfolio Theory, Efficient Market Hypothesis, and other material with the conclusion that about 90% of portfolio performance can be explained by choices in asset classes with the remaining due to security selection, market timing, etc. I think there is a common misconception out there that the S&P500 index is the only thing you need to invest in to do indexing. Note that creating a portfolio made up of different (hopefully not very well correlated) asset classes is not the same as the active-passive "playing the sector" strategy I think you are referring to. The reason you do not want to go all-in in the historic best return asset class, which happens to be small cap value, is the same reason why you want to diversify your risk in the first place. Also, that would be gambling/speculating and not investing. Small cap value stocks have higher standard deviation than large cap. You can crash badly if that is all you own. Asset allocation forces the concept of buy low sell high through rebalancing. To rebalance, you need multiple asset classes to make it work effectively. Berstein has a pretty good explaination on this topic where he illustrates how you can reduce your risk and improve your overall performance by adding different asset classes together. There are many authors on this topic. The best I've encountered so far are the two I listed. Read the Dimentional Fund Advisors (DPA) stuff for intro. I have to say the books were an eye-opener for me. Before then, I was following the misconceptions proprogated by different columnists that contains facts of partial truth. Note that in my earlier post, I was not proposing any method. Just answering why one might want to invest in multiple index funds.

Hi johto,

I'm a fan of DFA, although I find them pricey being broker-sold. I do agree that there is a diversified portfolio with exposure to other asset classes like bonds, RE, "juiced" stocks like small cap value and foreign. It would be tough to market weight these sectors.

Finally, I do not believe that a market weighted portfolio of these assets would outperform the S&P500, if you weight it properly. You are taking more risk with the S&P500 being all in stocks. There are limits to the benefits of diversification.

Looks like too much work and held up money for a measly $100

FatWalrusMember said: Looks like too much work and held up money for a measly $100
To each his own, but the 4 in 1 combo does all of the diversification in one simple package.

Fidelity also offers a credit card with 2% back to a 529 account.

We all know how much index funds are touted by the "experts", but I believe you get what you pay for. If what the gurus say is true, then why do thousands of actively managed funds still exist? Maybe their investors are simply being duped into falling for high-fee under performers? Everyone's heard that 80% of mutual funds don't beat the indices over time, but consider the 20% that do. There's virtually no index fund I know of that hasn't been trounced by an actively managed mutual fund. If their performance deteriorates, switch. Index funds are for snoozers.

In mutual funds it is abundantly clear that you do not get what you pay for. Setting aside the index vs active debate most very high expense mutual funds are asset traps where unwary investors keep their money because they're too lazy or unaware to know any better.

Slightly dated kiplinger article showing lower returns for high ER funds:
http://www.kiplinger.com/personalfinance/basics/investing/funds/expenses.htm

A real snoozer goes through a friendly broker and typically gets sold a very high expense funds most of which goes to pay for the broker's teeth whitening.


BTW, this has NOTHING to do with this thread. Do you want the $100 or not!? Fidelity has low and high expense managed funds and very cheap index funds. Take the offer or not - and choose your poison.

dudetheobscure said: Index funds are for snoozers.
In my view, that's exactly right.
There is a spectrum of active management you can choose from.
Index funds and asset allocation are on the passive-investing end of the scale.
The next step is actively trading funds as you suggest.
A further step is actively trading individual stocks.
Time is money and the time spent in active management comes at a price.
I really don't know where along the spectrum is the right balance.

manuel said: A real snoozer goes through a friendly broker and typically gets sold a very high expense funds most of which goes to pay for the broker's teeth whitening.
You're being really humorous here, but it's true.
Those golf games with your broker cost in more ways than one.

Anybody did similar deals in the past?
does Fidelity care if you withdraw funds from the account after you get the bonus?
does Fidelity care if you don't invest anything?

TIA for the info!

manuel said: In mutual funds it is abundantly clear that you do not get what you pay for. Setting aside the index vs active debate most very high expense mutual funds are asset traps where unwary investors keep their money because they're too lazy or unaware to know any better.

Slightly dated kiplinger article showing lower returns for high ER funds:
http://www.kiplinger.com/personalfinance/basics/investing/funds/expenses.htm

A real snoozer goes through a friendly broker and typically gets sold a very high expense funds most of which goes to pay for the broker's teeth whitening.


In no way are ALL high-expense mutual funds deals. There are certainly turkeys and sundry rip-offs among them for sure.

kmith said: dudetheobscure said: Index funds are for snoozers.
In my view, that's exactly right.
There is a spectrum of active management you can choose from.
Index funds and asset allocation are on the passive-investing end of the scale.
The next step is actively trading funds as you suggest.
A further step is actively trading individual stocks.
Time is money and the time spent in active management comes at a price.
I really don't know where along the spectrum is the right balance.


I get fed up with the "index fund" pablum being churned out by various "pop" advisor-columnists and mutual fund purveyors like Vanguard.

Skipping 1579 Messages...
oopsz said: palswim said: halfportion said: Have they stopped sending prepaid envelopes for deposits?
I reordered deposit slips and the envelopes that came with them were not prepaid.


A rep told me No (this is the last time I'll paste this in a thread, really)


[me]: Initial Question/Comment: I remember receiving pre-paid deposit slip envelopes when I ordered mySmart Cash account deposit slips. In my last order, I received envelopes requiring a stamp. Does Fidelity no longer provide pre-paid envelopes?
...
[rep]: Please give me a moment to determine if prepaid envelopes are still a available for these accounts.
[me]: Thank you.
[rep]: Thank you for your patience.
[rep]: We no longer provide prepaid envelopes for these accounts.
[me]: I see. Do you provide pre-paid envelopes for any other type of account?
[rep]: No, not at this time.
[me]: Ok, thank you.


Well, that's damn annoying. Is schwab still giving out prepaid envelopes?


Yes

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