What Fidelity does and how you use it

Fidelity is a brokerage firm — it holds your money and securities, executes trades you request, and provides tools to manage your investments. When you open an account with Fidelity, you deposit cash, and that cash sits in your account until you direct Fidelity to buy stocks, bonds, mutual funds, or other investments. Fidelity then buys those securities on your behalf and holds them in your name. You can sell them whenever you want, and the proceeds return to your cash balance.

Fidelity also acts as a custodian for retirement accounts like IRAs and 401(k)s — it keeps the account separate from your personal assets and enforces the tax rules that apply to retirement money. Beyond brokerage and custody, Fidelity offers research tools, educational content, and advisory services, though not all of these are free.

Key Takeaways

  • Fidelity holds your cash and securities in an account you control, and executes buy and sell orders you place through their website, app, or phone.
  • You can open a taxable brokerage account, a retirement account (IRA or Roth IRA), or both, and each has different tax treatment and withdrawal rules.
  • Fidelity charges no commission on stock and ETF trades, but does charge fees for mutual funds, advisory services, and certain account types.
  • Your money is protected by SIPC insurance up to $500,000 per account type, which covers losses if Fidelity fails but not if your investments lose value.
  • You can access your account online, through the mobile app, or by phone, and can set up automatic investments or withdrawals.

Types of accounts Fidelity offers

A taxable brokerage account is the most basic option. You deposit money, buy and sell investments, and pay taxes on any gains or dividends each year. There is no contribution limit, no age restriction on withdrawals, and no penalty for taking money out. This account is useful if you have already maxed out retirement savings or need access to the money before retirement age.

A Traditional IRA lets you contribute up to a set annual limit (the limit changes each year) and deduct those contributions from your taxes in the year you make them. The money grows tax-free inside the account, but you pay income tax on withdrawals after age 59½. If you withdraw before that age, you typically owe a 10 percent penalty plus income tax, with some exceptions for hardship or first-time home purchase.

A Roth IRA works differently: you contribute after-tax money (no deduction), the money grows tax-free, and withdrawals after age 59½ are tax-free. You cannot deduct contributions, but you also do not pay tax on gains. Roth accounts have income limits — if you earn above a certain threshold, you cannot contribute directly, though you may be able to use a backdoor Roth strategy.

Fidelity also offers SEP IRAs and Solo 401(k)s for self-employed people and small business owners, with much higher contribution limits than regular IRAs. Each account type has different rules, so the right choice depends on your income, retirement timeline, and tax situation.

How to buy and sell investments through Fidelity

Once your account is open and funded, you place a trade by entering the ticker symbol of the security you want to buy, the number of shares, and the type of order. A market order buys or sells immediately at the current price. A limit order lets you set a maximum price you will pay (for a buy) or a minimum price you will accept (for a sell), and the trade only executes if the price reaches that level.

Fidelity charges no commission on stocks and ETFs, meaning you do not pay a per-trade fee when you buy or sell them. However, mutual funds sold through Fidelity may carry a sales charge or load, depending on the fund. Some mutual funds are load-free, and Fidelity's own mutual funds (branded Fidelity or Spartan) often have low or no loads.

Trades settle in two business days, meaning the cash or securities do not move to or from your account until two days after you place the order. During that settlement window, the money is reserved but still technically yours. If you sell a security, you cannot use the proceeds to buy another security until settlement is complete, though some accounts allow margin borrowing to trade before settlement.

Fidelity's fee structure

Fidelity charges no account maintenance fee for most brokerage and IRA accounts, and no commission on stock and ETF trades. However, other fees do apply depending on what you do:

  • Mutual fund sales charges: Some mutual funds carry a front-end load (a percentage deducted when you buy), a back-end load (charged when you sell), or a level load (an annual charge). Load-free funds and Fidelity's own funds typically have no load.
  • Advisory fees: If you use Fidelity's robo-advisor or hire a financial advisor, you pay an annual percentage of assets under management, usually between 0.35 and 1 percent.
  • Wire transfer fees: Fidelity charges a fee to wire money out of your account, though incoming wires are free.
  • Margin interest: If you borrow money to buy securities (margin), you pay interest on the borrowed amount.
  • Inactive account fees: Some account types charge a fee if you do not trade or maintain a minimum balance for a set period, though this is rare.

Always check the fee schedule for the specific account and investments you are considering, because fees vary by product and can significantly affect your returns over time.

How Fidelity protects your money

SIPC insurance protects your account if Fidelity fails or goes bankrupt. SIPC covers up to $500,000 per account type per customer — so if you have a brokerage account and an IRA at Fidelity, each is covered separately up to $500,000. SIPC does not cover losses from bad investments or market downturns; it only covers losses if the brokerage itself fails and cannot return your securities or cash.

Fidelity also maintains additional insurance beyond SIPC through private carriers, which can cover amounts above the SIPC limit. Check Fidelity's website for current coverage details, as these policies change.

Your account is also protected by username and password, and Fidelity offers two-factor authentication to prevent unauthorized access. If someone gains access to your account and makes unauthorized trades, Fidelity has a process to investigate and reverse fraudulent transactions, though you must report the fraud promptly.

How to fund and withdraw from your Fidelity account

You can deposit money into your Fidelity account by bank transfer (ACH), wire transfer, or check. Bank transfers are free and typically take three to five business days. Wire transfers are faster (usually same day) but carry a fee. You can also mail a check to Fidelity, though this is slower.

To withdraw money, you can request an ACH transfer to your bank account (free, takes three to five days), a wire transfer (fee, usually same day), or a check mailed to you. Some retirement accounts have restrictions on withdrawals — for example, a Traditional IRA withdrawal before age 59½ may trigger a penalty — so check the rules for your account type before withdrawing.

You can also set up automatic investments, where Fidelity deducts a set amount from your bank account on a schedule you choose and buys investments automatically. This is useful for dollar-cost averaging, where you invest the same amount regularly regardless of market price.

Getting help and accessing your account

Fidelity offers customer service by phone, email, and live chat on its website. Phone lines are open during business hours and on some weekends. You can also visit a Fidelity branch in person if one is near you — Fidelity has offices in most major cities.

Your account is accessible 24/7 through the Fidelity website or mobile app. You can view your holdings, place trades, transfer money, and review your account history anytime. The app also includes research tools, news, and educational content.

Fidelity publishes educational guides, webinars, and articles on investing basics, retirement planning, and specific strategies. These resources are free and do not require you to be a customer, though they are more detailed if you log into your account.

Frequently Asked Questions

Can I move money or investments from another brokerage to Fidelity?

Yes. Fidelity offers a service called ACAT (Automated Customer Account Transfer) that moves securities from another brokerage to Fidelity without selling them. The transfer usually takes five to seven business days. You can also transfer cash by requesting a wire or ACH from your old brokerage to Fidelity. If you are moving a retirement account, the process is similar but the receiving account must be the same type (IRA to IRA, 401(k) to 401(k), etc.).

What happens if I do not have enough cash to buy a stock I want?

You can use margin, which means borrowing money from Fidelity to buy the security. You pay interest on the borrowed amount, and Fidelity can force you to sell securities if your account value drops below a certain level. Margin is risky and is not recommended for beginners. Alternatively, you can wait until you have saved enough cash, or buy a fractional share if Fidelity offers it for that security.

Do I have to pay taxes on investments I hold but do not sell?

In a taxable brokerage account, you pay taxes on dividends and interest each year, even if you do not sell. You only pay capital gains tax when you actually sell at a profit. In a retirement account like a Traditional or Roth IRA, you do not pay taxes on dividends or gains while the money is in the account — taxes are deferred (Traditional) or eliminated (Roth).

Can I day trade with Fidelity?

Yes, but if you make more than three day trades in five business days in a margin account, Fidelity will flag you as a pattern day trader. Pattern day traders must maintain a minimum account balance of $25,000. If you do not meet this requirement, you cannot day trade. This rule is set by the SEC, not Fidelity, and applies at all brokerages.

What is the difference between a Fidelity mutual fund and an ETF?

Both are baskets of securities, but they trade differently. Mutual funds are priced once per day after the market closes, and you buy and sell at that price. ETFs trade throughout the day like stocks, so the price changes minute by minute. ETFs typically have lower fees and are more tax-efficient in taxable accounts. Fidelity charges no commission on either, but some mutual funds carry a sales load.