Fidelity Investments, also referred to as Fidelity, is a financial services investment firm and is a solid brokerage for investors. It boasts over 40 Million individual investors and has $11.1 Trillion in customer assets under administration1. The company has a long history and reputation and offers low-cost mutual funds and ETFs, advice, and other services.
Fidelity has:
- Low fees and sometimes no fee
- Good customer service
- Easy account opening process
- Low minimum deposit
- Easy to use web and mobile trading
Like many financial services firms, Fidelity offers $0 commission for online US stock trades. In 2018, Fidelity introduced Fidelity ZERO funds, the industry’s first zero expense ratio indexed mutual fund for individual investors. This is particular important for investors who know that high expense ratios can eat into a sizeable chunk of future returns.
The company also allows dollar-based investing with fractional shares. This means instead of paying for an entire share of a stock, you can buy a fraction of a share by indicating a dollar value to invest. For example, if Amazon is trading for $2900. A single share would cost $2900 but with fractional shares, you can buy $100 worth of Amazon stock.
Fidelity Mobile App enables you to easily trade anytime and anywhere.
How to Buy Stocks with Fidelity – A Step by Step Guide
This post will provide a step by step guide on how to buy stocks with Fidelity.
1. Opening an Account
Go to Fidelity.com and Open an Account
(Skip this step if you already have an account with Fidelity)
The different account types that you can select may include:
- Brokerage
- Rollover IRA
- Roth IRA
- Traditional IRA
IRA stands for Individual Retirement Account and is an account that allows an individual to save for retirement with tax free growth or on a tax-deferred basis. If you are not planning to invest primarily for retirement, you can open a brokerage account for other goals.
As you progress through the account opening process, Fidelity will ask about account ownership and whether it should be in an individual or joint name.
Next, Fidelity will ask if you are already a Fidelity customer:
If you are not, you’ll need to provide additional details and create a user name and password. Additional information may include naming beneficiaries, setting investing goals and transferring money.
If you are a current Fidelity customer, log in with your user name and password. Fidelity will prefill the application with the information that the company has on file.
2. Account Funding
Your account will be created but it won’t be funded. You will need to fund your account and transfer money so you can trade. Click “Transfer” as shown below.
You’ll be prompted with a screen that asks where you want to transfer money from.
You can transfer money from other Fidelity accounts if you have any accounts with money in the settlement account. You can also link to an outside bank, send money via Paypal, or transfer an existing brokerage account to Fidelity.
I prefer to link to my checking or savings account so I can either automate transfers or easily transfer additional deposits in the future.
If you do link a bank, the following are your deposit options.
-Electronic Funds Transfer (EFT) – Free
-Bank wire (Bank fees)
3. Confirm Funding Transfer Completed
It might take a few days for the money to settle in your account. Log back into your account and check.
You’ll see your current account value equal to what you transferred into the account. You can check by clicking balances. You’ll see the total account value as well as “available to trade”.
4. Research Your Investment
Fidelity provides insights and information into stocks, ETFs, funds, and other securities under “News & Research”. Click News & Research or type the stock or fund that you are looking for into the search box.
As an example, I used Coca-Cola Company (Ticker Symbol KO). Fidelity provides lots of useful information at your fingertips.
5. Trade (Buy and Sell) Stock, Bonds, and Other Securities
Once you complete your research, you can purchase shares of a stock, ETF, fund, or other securities by clicking BUY.
You can also go to Accounts & Trade and click Trade.
If you have multiple Fidelity accounts, pick the correct account where you want to trade.
On the trade screen, choose the symbol of the security/stock/fund you wish to trade.
You can trade Stocks/ETFs, options, mutual funds, fixed income, currency, etc.
Cash available to trade – This tells you the amount of money in your settlement account.
You’ll get a preview of the current price and the Bid and Ask.
Bid price – highest price a buyer will pay for a security
Ask price – lowest price a seller will accept for a security
The last price is the last agreed upon price between buyers and sellers. Buyers are bidding at bid price. Sellers are asking for the ask price. Some stocks are popular and often traded so they have high volume with low spreads between the bid and the ask price. Meanwhile, other stocks may be less popular and thinly traded (low volume) resulting in a wider spread between the bid and ask price.
You can also click on “more Info” to see additional details such as:
- 52 week range – the high and low ranges where the security traded over the last 52 weeks
- Previous close – the prior day’s final price when the market officially closed for the day
- Open – the price of the security when the market officially opened
- 90 day average volume – the average number of shares traded over the past 90 days
- Ex-dividend date – the timing of when dividends are paid out (if the company offers dividends)
- Earnings date – the date when the company is expected to announce previous quarter’s earnings.
Choose whether you want to buy or sell.
With Fidelity, you have the option to buy # of shares or you can specify a dollar amount and Fidelity will buy fractionalized shares.
Order Type:
Market – Executes at the next available price
Limit – You specify the maximum price you’re willing to buy
Day – Your trade is good for the day and cancels at the market close if it’s not executed
GTC – Good Until Canceled – This order will remain open until it is executed at the price you specified.
Preview your order
Make sure everything looks correct. Especially the dollar amount. Make sure you have enough in your account to cover the purchase. If something does not look right, cancel the trade and make the necessary changes.
You’ll see the estimated order value and commission.
With Fidelity, US stock trades should be $0 commission.
New York Stock Exchange is open 9:30 am and 4PM Eastern Time. Otherwise, your trade will execute when the market opens.
Go to the main page. You can see your order history under Activity & Orders.
Look at History and Pending Transactions.
If your order was successful, you’ll see that your account will now contain the shares that you purchased.
Congratulations! You just bought stock with Fidelity.
How to Buy Stocks with Fidelity on the Fidelity Mobile App
Note: Mobile apps are frequently updated so my screenshots may look different but the overall process should remain the same.
If there are substantial changes, make a comment below and I’ll update the post.
Make sure to follow steps 1 and 2 above. Make sure you have an account or opened an account on the web. You’ll need the login and password for the Fidelity Mobile App.
Get the App
If you don’t have the mobile app, download from the Apple App Store or the Google Play store.
Log in, you’ll see an account overview of all your accounts.
Scroll and see additional details such as asset allocation and news related to securities that you have in your portfolio.
Check Your Balance
If you click your account, you’ll see the balance information over time. You can also check on your positions to see how your stocks, ETFs, and bonds are performing.
Trade
To buy or sell a stock, click the button at the top.
Once you click the button, a trade screen will appear that details different transactions types including
- Trade
- Deposit Checks
- Transfer
- Pay Bills
To trade (buy or sell) stocks, click “Trade” and the following screen will appear.
Similar to the web based trade screen, you look up the symbol, determine the action to buy/sell, select a quantity, choose an order type, and determine how long to keep this order open.
As an example, I input Coca-Cola Company (Symbol KO). The latest price and bid/ask prices appeared.
Click preview order and make sure all the details are what you want to purchase. Then submit the order.
Lastly, take a look at the activity screen to see if your order was completed or if it is still open pending action.
Congratulations! You completed your stock purchase.
Closing Comments
This post showed you how to buy and sell stock within your brokerage account but the same steps can be used to buy and sell stocks for retirement accounts such as Roth IRA, Traditional IRA, and Rollover IRA accounts.
For more information on how to invest, take a look at the guide I put together for young adults but it is applicable to all ages.
For those of you who follow Bogleheads style investing, take a look at the Fidelity Wiki to learn what low-cost no transaction fee mutual funds are available at Fidelity that track similar indexes from other providers.
