Fidelity - no longer any fees, 5.21% Money Market, $100 bonus, Airline Miles

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.

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 ?

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."

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.

why do you need 5 index funds?

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

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.

,

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.

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

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: 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?

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.

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.

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.

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

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

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.

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.

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.

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