How to Invest in ETFs Fidelity for Beginners

Investing in ETFs with Fidelity can seem daunting, but it doesn't have to be. You can start with a low balance of just $100.

Fidelity offers over 1,100 ETFs to choose from, giving you a wide range of investment options. This variety can be overwhelming, but it's also a great opportunity to diversify your portfolio.

To begin, you'll need to open a brokerage account with Fidelity. This typically takes just a few minutes to complete online, and you can fund your account with a transfer from your bank or by depositing a check.

An ETF is essentially a fund that contains groups of securities, like stocks or bonds, often organized around a specific theme, such as a sector or market index.

ETFs allow you to gain exposure to hundreds or even thousands of different companies or bonds with a single trade, similar to a mutual fund.

ETFs trade like a common stock on an exchange, which means they experience price changes throughout the day as they're bought and sold.

Individuals can buy an ETF through a broker, such as a financial institution or a bank.

Investors can choose from various ETFs that track specific market indexes, like the S&P 500 Index or the Nasdaq composite index.

Diversification is a key benefit of investing in ETFs, allowing you to gain exposure to a range of assets with a single trade.

You should thoroughly read and investigate the fund's mission, what the fund is invested in, the expense ratio of the fund, and how the fund is rated by third-party research firms, like Morningstar.

ETFs can be a great option for investors who want to gain diversified exposure in a single trade, but it's essential to consider whether the fund aligns with your investment goals, risk tolerance, and time horizon.

ETFs offer diversified exposure in a single trade, allowing you to invest in bonds, sectors of the stock market, or major market indexes like mutual funds.

Having a diversified investment portfolio is crucial for minimizing risk and maximizing returns.

Investing in an ETF is relatively straightforward, as you can buy and sell shares just like stocks.

Before making any investment decision, it's essential to thoroughly read and investigate the fund's mission, what the fund is invested in, and the expense ratio of the fund.

ETFs can be a great option for investors who want to gain exposure to specific sectors or markets without having to buy individual stocks.

Be sure to consider whether the fund aligns with your investment goals, risk tolerance, and time horizon before making a decision.

Reading fund ratings from third-party research firms like Morningstar can also provide valuable insights into the fund's performance and potential risks.

Risk and return potential are joined at the hip, so it's essential to understand your risk level and how it affects your investment strategy.

Taking on risk doesn't have to be a bad thing – in fact, it can lead to higher potential returns over the long run. A low-risk portfolio, on the other hand, might not return as much.

Your time horizon is a key factor in determining how much risk to take on. The longer your money will stay invested, the more risk you may be able to take on. This is why a 20-something investing for retirement can typically invest in an aggressive, stock-heavy portfolio.

Your risk tolerance is also crucial. An aggressive portfolio might return more over the long run but could go through more severe declines over shorter-term periods. This means you need to think about how much stock market up-and-down you're willing to put up with in exchange for potential longer-term growth.

Your overall financial strength, or risk capacity, is another important consideration. If you have solid emergency savings, a stable job, and manageable debt, you may be able to take on more risk than someone with a shakier financial foundation.

Here are the 3 key factors that typically inform your risk level decision:

If you're looking for a diversified investment, ETFs are a great option. They can help you gain exposure to bonds, sectors of the stock market, or major market indexes in a single trade.

Before buying any ETF, make sure to thoroughly read and investigate the fund's mission, what it's invested in, the expense ratio, and how it's rated by third-party research firms like Morningstar.

To find the right ETF for you, use a screener to identify ETFs and ETPs that match your investment goals.

Auto-investing is a game-changer for anyone looking to invest in ETFs. By consistently investing a fixed dollar amount every week or month, you can benefit from dollar-cost averaging, which helps reduce the impact of market volatility.

Dollar-cost averaging is a simple yet effective strategy that involves spreading out your investment contributions over time. This can be achieved by investing a fixed amount every week or month, rather than investing a lump sum all at once.

Investing in ETFs can be less stressful when you auto-invest, as you don't have to worry about daily market swings. By investing on a fixed schedule, you can leave your investments on auto-pilot and focus on more important things.

Auto-investing also helps you avoid the temptation to spend money you see, as your money is automatically transferred into your investment accounts. This can be especially helpful if you're prone to overspending or have trouble saving.

To invest consistently, you need to be disciplined to transfer money into a brokerage account and invest over time. However, auto-investing takes care of this for you, so you don't have to think about it anymore.

Here are the benefits of auto-investing at a glance:

Diversifying your investment portfolio is a great idea, and ETFs can be a fantastic way to do it. You can gain exposure to bonds, sectors of the stock market, or major market indexes with a single trade.

Before buying an ETF, make sure to read and investigate its mission, what it's invested in, and the expense ratio. This will help you understand how it fits into your broader investment plan.

Consider using a screener to identify ETFs and ETPs that match your investment goals. This can save you time and effort in finding the right fit for you.

To ensure you're making a smart investment decision, always read the fund's ratings from third-party research firms like Morningstar. This will give you a better understanding of the fund's performance and potential.