How to Start Investing in a Brokerage: Difference between revisions

Line 46:

[[File:Fidelity_Trading_Screen.png|center|595x595px]]

== Opening Account on Fidelity ==

In order to start investing, you need to open an account. When you click on the Fidelity dashboard, you get several options for which accounts to open.

#

I personally have the following accounts opened:

* 1x Brokerage Account

* 1x Roth IRA

* 2x Cash Management (CMA) accounts

* 1x Health Saving Account (HSA)

Honestly, there’s no harm to opening any of those 6 accounts that Fidelity has listed. Fidelity doesn’t do any hard inquiry or credit checks when opening any of them. There’s also no annual fee, maintenance fee, etc. that some banks charge so even if you don’t end up using it, there’s no downside.

== Transferring Cash into Fidelity ==

When you open a Fidelity account, you’ll see all your accounts listed on the dashboard. and see the dashboard, it will look something like this:

All your accounts will be listed on the left-hand side and you can click on each one of them to view more detailed info like what securities you’re invested in, how much you’ve gained, account/routing number, etc.

Now in order to actually start trading, you need to transfer cash over to the account. You can do this by linking your bank, credit union, debit card. To do this click on '''Transfer > EFT to or form a bank''' and follow the instructions listed there.

Now just like when you transfer cash from one bank account to another, there is a waiting period where it takes time for the cash to actually “settle”. So let’s say if you transfer $100 on Monday, it might take 2-4 business days for the cash to become available to trade. In Fidelity, the cash will show as “Pending Transfer” and once it’s done transferring over, it’ll then show up as cash and the default position that you selected.

Speaking of default position, as part of the account opening process, you’ll be asked what to put your core cash in. One of the reasons why I prefer Fidelity over other brokerages is that the default core position '''SPAXX''' is a money market fund (MMF) which generates 3-4% interest rate per year just like an HYSA. It’s awesome because this money is '''auto-invested''' AND '''auto-liquidated''' meaning that it essentially performs just like a regular savings account (and in some ways better). Some brokerages like Charles Schwab don’t offer this feature so you have to manually buy/sell MMFs which takes time and the default position functions like a regular bank which only generate 0-0.05% interest rate (so nothing).

== Placing Trades in Fidelity ==

Ok cool, so now all your cash is settled which means you can begin trading! For the first trade, I highly recommend you do it during the market hours so you can actually see your trade go into effect real time. The market hours are '''Mon-Fri 9:30am-4:30pm EST''' and it’s closed on holidays. Fidelity will likely make you trade during market hours for your first trade anyway.

To start, open the trading menu by clicking Trade:

'''Trade:''' As you can see, you get a ton of options for what you can invest in. Since we just want to invest in VOO (the S&P 500 ETF I mentioned earlier), let’s just stick to Stocks/ETFs.

'''Account:''' Remember to set the correct account you want to trade for. This is independent from the account you’re currently looking at in the dashboard.

'''Symbol:''' For the symbol, search up “VOO” and make sure when you select it, it returns “Vanguard 500 Index Fund ETF.”

'''Action:''' For the action, set “Buy”.

'''Quantity:''' You get the option of doing it by shares or by dollars. Let’s stick to dollars since that makes it easier. Ex. For VOO, it’s easier to just put $100 for the buy order instead of 0.14 shares (which btw remember the share amount keeps changing during market hours so it’s not guaranteed to be 0.14 when you actually place the trade). And Fidelity will automatically convert that $100 into whatever the fractional share amount is.

'''Order Type:''' We can do “Market” so it executes immediately if in market hours. Or once you do after-market trading, you can do limit orders.

'''Time in Force:''' Set to “Day”

Once you have all of that, you can click “Review Order.” Make sure it’s all correct, and then go ahead and place trade.

If Fidelity doesn’t detect any issues, the order will be submitted. Otherwise, Fidelity will give you a warning before proceeding. Common warnings I’ve had in the past are '''good faith violations''' and '''wash sales'''.

* '''Good Faith Violation''' = You’re trading with money that hasn’t settled yet. Usually these can be safely ignored unless you’re immediately buying a stock after selling.

* '''Wash Sale''' = When you try buying the same stock/security after selling for a loss within 30 days of selling the stock. It means you won’t be able to claim the tax benefit for selling (which of course you want to).

# Making Sure Your Trade Has Gone Through

Now after placing the trade, we want to make sure that the trade has actually gone through. Easiest way is to refresh by clicking the refresh icon. If the trade has gone through, you’ll see a yellow highlighted row indicating that the trade has gone through.

== That's too much work, how can I automate all of this? ==

Fidelity has an option where you can automatically invest your money in a security by default.

@@ Line 46: / Line 46: @@
 [[File:Fidelity_Trading_Screen.png|center|595x595px]]
+== Opening Account on Fidelity ==
+In order to start investing, you need to open an account. When you click on the Fidelity dashboard, you get several options for which accounts to open.
+#
+I personally have the following accounts opened:
+* 1x Brokerage Account
+* 1x Roth IRA
+* 2x Cash Management (CMA) accounts
+* 1x Health Saving Account (HSA)
+Honestly, there’s no harm to opening any of those 6 accounts that Fidelity has listed. Fidelity doesn’t do any hard inquiry or credit checks when opening any of them. There’s also no annual fee, maintenance fee, etc. that some banks charge so even if you don’t end up using it, there’s no downside.
+== Transferring Cash into Fidelity ==
+When you open a Fidelity account, you’ll see all your accounts listed on the dashboard. and see the dashboard, it will look something like this:
+All your accounts will be listed on the left-hand side and you can click on each one of them to view more detailed info like what securities you’re invested in, how much you’ve gained, account/routing number, etc.
+Now in order to actually start trading, you need to transfer cash over to the account. You can do this by linking your bank, credit union, debit card. To do this click on '''Transfer > EFT to or form a bank''' and follow the instructions listed there.
+Now just like when you transfer cash from one bank account to another, there is a waiting period where it takes time for the cash to actually “settle”. So let’s say if you transfer $100 on Monday, it might take 2-4 business days for the cash to become available to trade. In Fidelity, the cash will show as “Pending Transfer” and once it’s done transferring over, it’ll then show up as cash and the default position that you selected.
+Speaking of default position, as part of the account opening process, you’ll be asked what to put your core cash in. One of the reasons why I prefer Fidelity over other brokerages is that the default core position '''SPAXX''' is a money market fund (MMF) which generates 3-4% interest rate per year just like an HYSA. It’s awesome because this money is '''auto-invested''' AND '''auto-liquidated''' meaning that it essentially performs just like a regular savings account (and in some ways better). Some brokerages like Charles Schwab don’t offer this feature so you have to manually buy/sell MMFs which takes time and the default position functions like a regular bank which only generate 0-0.05% interest rate (so nothing).
+== Placing Trades in Fidelity ==
+Ok cool, so now all your cash is settled which means you can begin trading! For the first trade, I highly recommend you do it during the market hours so you can actually see your trade go into effect real time. The market hours are '''Mon-Fri 9:30am-4:30pm EST''' and it’s closed on holidays. Fidelity will likely make you trade during market hours for your first trade anyway.
+To start, open the trading menu by clicking Trade:
+'''Trade:''' As you can see, you get a ton of options for what you can invest in. Since we just want to invest in VOO (the S&P 500 ETF I mentioned earlier), let’s just stick to Stocks/ETFs.
+'''Account:''' Remember to set the correct account you want to trade for. This is independent from the account you’re currently looking at in the dashboard.
+'''Symbol:''' For the symbol, search up “VOO” and make sure when you select it, it returns “Vanguard 500 Index Fund ETF.”
+'''Action:''' For the action, set “Buy”.
+'''Quantity:''' You get the option of doing it by shares or by dollars. Let’s stick to dollars since that makes it easier. Ex. For VOO, it’s easier to just put $100 for the buy order instead of 0.14 shares (which btw remember the share amount keeps changing during market hours so it’s not guaranteed to be 0.14 when you actually place the trade). And Fidelity will automatically convert that $100 into whatever the fractional share amount is.
+'''Order Type:''' We can do “Market” so it executes immediately if in market hours. Or once you do after-market trading, you can do limit orders.
+'''Time in Force:''' Set to “Day”
+Once you have all of that, you can click “Review Order.” Make sure it’s all correct, and then go ahead and place trade.
+If Fidelity doesn’t detect any issues, the order will be submitted. Otherwise, Fidelity will give you a warning before proceeding. Common warnings I’ve had in the past are '''good faith violations''' and '''wash sales'''.
+* '''Good Faith Violation''' = You’re trading with money that hasn’t settled yet. Usually these can be safely ignored unless you’re immediately buying a stock after selling.
+* '''Wash Sale''' = When you try buying the same stock/security after selling for a loss within 30 days of selling the stock. It means you won’t be able to claim the tax benefit for selling (which of course you want to).
+# Making Sure Your Trade Has Gone Through
+Now after placing the trade, we want to make sure that the trade has actually gone through. Easiest way is to refresh by clicking the refresh icon. If the trade has gone through, you’ll see a yellow highlighted row indicating that the trade has gone through.
 == That's too much work, how can I automate all of this? ==
 Fidelity has an option where you can automatically invest your money in a security by default.

How to Start Investing in a Brokerage: Difference between revisions

Stoulram (talk | contribs)