The basic steps to buy an index fund on Fidelity

To buy an index fund on Fidelity, you log into your account, search for the specific fund by name or ticker symbol, choose how many shares you want, and place the order. The whole process takes about five minutes once your account is open and funded. Fidelity will execute the trade during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays) or queue it for the next market open if you place it after hours.

You need three things before you can buy: a Fidelity brokerage account that is already open, money in that account (either from a deposit or a transfer), and the name or ticker symbol of the index fund you want to buy. If you do not have an account yet, you will need to open one first, which involves providing your Social Security number, address, and employment information. This takes about 10 minutes online.

Key Takeaways

  • Log into your Fidelity account, search for the index fund by name or ticker, enter the number of shares, and confirm the order to complete a purchase in minutes.
  • Your account must be funded before you buy — either through a bank transfer, wire, or check deposit, which can take one to three business days to clear.
  • Market orders execute immediately during trading hours; limit orders let you set a price you are willing to pay and may take days or never fill.
  • Fidelity charges no commission on most index funds, but some funds charge an internal expense ratio that reduces your returns slightly each year.
  • You can buy index funds in a regular taxable brokerage account, a retirement account like an IRA, or a 401(k) if your employer plan offers Fidelity as the provider.

Setting up your Fidelity account and funding it

Before you can buy anything, you need an open account with money in it. Go to fidelity.com, click "Open an account," and choose the account type you want — most people starting out choose a standard brokerage account, though you can also open an IRA or other retirement account. You will answer questions about your employment, income, and investment experience. Fidelity does not require a minimum deposit to open the account, but you will not be able to buy until you have transferred money in.

To fund your account, log in and go to "Accounts & Trade" then "Transfers." You can link a bank account and transfer money electronically (this usually takes one to three business days), wire money (same day but with a fee), or mail a check. Once the money appears in your account as a cash balance, you are ready to buy. You can see your cash balance on your account dashboard under "Positions" or "Cash."

Finding the specific index fund you want to buy

Fidelity offers thousands of funds, including many index funds from Fidelity itself and from other fund companies. To find the one you want, log in and click "Invest" or "Brokerage" depending on your account type, then click "Stocks, ETFs & Mutual Funds." In the search box, type either the fund's full name (like "Fidelity S&P 500 Index Fund") or its ticker symbol (like "FXAIX" for that same fund).

The search will show you the fund's details page, which includes the expense ratio (the annual cost as a percentage), the fund's holdings, and its performance history. Read the expense ratio carefully — it is the only ongoing cost you will pay to Fidelity for most index funds, since Fidelity does not charge commissions. An expense ratio of 0.03% means you pay $3 per year for every $10,000 invested. Compare this to other versions of the same index if Fidelity offers more than one — for example, Fidelity has both mutual fund and ETF versions of many indexes, and they may have different expense ratios.

Placing your order: market orders versus limit orders

Once you have found the fund, click "Buy" or "Trade." You will see a screen asking how many shares you want to buy. Enter the number — if you have $5,000 to invest and the fund costs $100 per share, you would enter 50. Then choose your order type: market order or limit order.

A market order buys at whatever price the fund is trading at right now. If you place it during market hours, it executes within seconds. If you place it after 4 p.m., it queues for the next market open (9:30 a.m. the next trading day). This is the simplest choice for most people buying index funds, because the price does not move much from day to day.

A limit order lets you set the maximum price you are willing to pay. If the fund is trading at $100 and you set a limit of $99, the order will only fill if the price drops to $99 or lower. Limit orders can take days to fill or may never fill at all if the price never reaches your limit. Most people buying index funds use market orders because the price difference is usually small and the certainty of the trade matters more than saving a few cents per share.

Confirming your order and what happens next

After you choose your order type, review the details: the fund name, the number of shares, the estimated cost, and the order type. Click "Preview Order" to see a final summary, then click "Submit Order" or "Place Order." Fidelity will show you a confirmation number and a confirmation screen. You will also receive an email confirmation within a few minutes.

If you placed a market order during market hours, your order is complete and the shares are now in your account. You can see them on your account dashboard under "Positions." If you placed the order after hours or on a weekend, it will execute at the market open the next trading day. If you placed a limit order, it will sit in your account until the price condition is met or you cancel it. You can cancel any order that has not yet filled by going to "Accounts & Trade" and clicking "Orders."

Understanding costs and expense ratios

Fidelity does not charge a commission (a per-trade fee) when you buy most index funds, whether they are Fidelity's own funds or funds from other companies. However, every index fund charges an expense ratio, which is an annual fee taken from the fund's assets. This fee is automatic — you do not pay it separately — and it reduces your returns slightly each year.

For example, if you invest $10,000 in a fund with a 0.03% expense ratio, you pay about $3 per year. If you invest in a fund with a 0.50% expense ratio, you pay about $50 per year on the same $10,000. Over decades, this difference compounds significantly. Fidelity's own index funds tend to have low expense ratios (often 0.03% to 0.10%), which is one reason many people choose them. Before you buy, check the expense ratio on the fund's details page and compare it to similar funds tracking the same index.

Buying index funds in retirement accounts versus taxable accounts

The steps to buy are the same whether your account is a regular taxable brokerage account, an IRA, or a 401(k), but the account type matters for taxes. In a taxable account, you pay capital gains tax when you sell the fund at a profit. In a traditional IRA or 401(k), you do not pay tax on gains until you withdraw the money in retirement. In a Roth IRA, you do not pay tax on gains ever, as long as you follow withdrawal rules.

If you are choosing between account types, most financial advisors suggest maxing out a 401(k) up to your employer's match (assistance programs), then maxing out a Roth IRA if you are may be able to access, then putting additional money in a taxable account. But the buying process itself is identical — you search, choose your fund, enter the number of shares, and place the order. The account type is just a container that determines the tax treatment later.

Frequently Asked Questions

Can I buy a fractional share of an index fund on Fidelity?

Yes. Fidelity allows you to buy fractional shares of most index funds, which means you can invest any dollar amount, not just whole shares. If you have $500 and the fund costs $100 per share, you can buy 5 shares. If you have $550, you can buy 5.5 shares. This makes it easier to invest smaller amounts without waiting to save up for a whole share.

What is the difference between a Fidelity index fund and an ETF that tracks the same index?

Both track the same index and have similar expense ratios, but they trade differently. A mutual fund (like FXAIX) trades once per day at the closing price, and you can set up automatic monthly investments. An ETF (like FSKAX) trades throughout the day like a stock, so the price changes minute to minute. For most people buying index funds to hold long-term, the differences do not matter much. Choose whichever has the lower expense ratio.

Do I have to buy whole shares, or can I invest a specific dollar amount?

You can do either. When you place an order, you can enter the number of shares you want, or on some Fidelity screens you can enter a dollar amount and Fidelity will calculate the shares for you, including fractional shares. Check the order screen to see which option is available for the fund you are buying.

What happens if I place an order after the market closes?

If you place a market order after 4 p.m. Eastern time on a weekday, or anytime on a weekend or holiday, it will queue for the next market open at 9:30 a.m. the following trading day. The order will execute at the opening price of that day. If you want to control the exact price, use a limit order instead.

Can I set up automatic monthly investments in index funds on Fidelity?

Yes, through a feature called "Automatic Investment Plan." You can set up monthly or weekly transfers from your bank account to Fidelity, and then set up automatic purchases of a specific index fund on the same schedule. This is useful for dollar-cost averaging — investing the same amount regularly regardless of price — and removes the need to remember to buy each month.