Table of Contents
Introduction
Investing can be a daunting task, especially for those who are new to the world of finance. With so many options available, it can be difficult to know where to start. That's where robo-advisors like Fidelity Go come in. Fidelity Go is an automated investment service that aims to make investing simple and accessible for everyone. In this article, we will explore five tips for maximizing returns with Fidelity Go, so you can make the most of your investment.
1. Understand Your Risk Tolerance
Before you start investing with Fidelity Go, it's important to understand your risk tolerance. Risk tolerance refers to your ability to handle fluctuations in the value of your investments. Fidelity Go offers a risk questionnaire that helps determine your risk tolerance level. It takes into account factors such as your age, financial goals, and investment experience. Based on your answers, Fidelity Go will recommend a portfolio that aligns with your risk tolerance.
It's crucial to be honest when answering the risk questionnaire. If you overestimate your risk tolerance, you may end up with a portfolio that is too aggressive for your comfort level. On the other hand, if you underestimate your risk tolerance, you may miss out on potential returns. By understanding your risk tolerance and investing accordingly, you can maximize your returns with Fidelity Go.
2. Take Advantage of Automatic Rebalancing
One of the key benefits of using Fidelity Go is automatic rebalancing. Rebalancing involves adjusting the allocation of your investments to maintain your desired asset mix. Over time, as some investments perform better than others, your portfolio may become unbalanced. For example, if stocks have performed well, they may make up a larger percentage of your portfolio than you originally intended.
Fidelity Go automatically rebalances your portfolio to ensure it stays in line with your target asset allocation. This means that if stocks have performed well and now make up a larger percentage of your portfolio, Fidelity Go will sell some stocks and buy other assets to bring your portfolio back to its target allocation. By taking advantage of automatic rebalancing, you can ensure that your portfolio remains diversified and maximize your returns.
3. Consider Tax-Loss Harvesting
Tax-loss harvesting is a strategy that involves selling investments that have experienced a loss to offset capital gains and reduce your tax liability. Fidelity Go offers tax-loss harvesting as part of its service. This means that if any investments in your portfolio have experienced a loss, Fidelity Go will sell them and reinvest the proceeds in a similar investment to maintain your desired asset allocation.
By utilizing tax-loss harvesting, you can potentially lower your tax bill and increase your after-tax returns. However, it's important to note that tax-loss harvesting is not suitable for all investors. It is most beneficial for those in higher tax brackets and those with taxable investment accounts. Before utilizing tax-loss harvesting, it's recommended to consult with a tax professional to understand the potential benefits and implications for your specific situation.
4. Take Advantage of Fidelity's Low Fees
When it comes to investing, fees can eat into your returns over time. That's why it's important to consider the fees associated with any investment service. Fidelity Go offers competitive fees compared to traditional financial advisors. The annual advisory fee for Fidelity Go is just 0.35% of your invested assets, which is significantly lower than the industry average.
By taking advantage of Fidelity's low fees, you can keep more of your investment returns. Over time, even a small difference in fees can have a significant impact on your overall returns. It's important to consider fees when choosing an investment service, and Fidelity Go offers a cost-effective option for those looking to maximize their returns.
5. Stay Informed and Monitor Your Portfolio
While Fidelity Go takes care of the day-to-day management of your portfolio, it's still important to stay informed and monitor your investments. Keep an eye on market trends and economic news that may impact your portfolio. Fidelity Go provides regular updates and insights to help you stay informed.
In addition, regularly review your portfolio to ensure it still aligns with your financial goals and risk tolerance. If your circumstances change or your goals evolve, you may need to make adjustments to your portfolio. By staying informed and monitoring your portfolio, you can make informed decisions and maximize your returns with Fidelity Go.
Conclusion
Fidelity Go offers a user-friendly and cost-effective way to invest. By understanding your risk tolerance, taking advantage of automatic rebalancing and tax-loss harvesting, and staying informed and monitoring your portfolio, you can maximize your returns with Fidelity Go. Remember, investing involves risk, and it's important to do your own research and consult with a financial advisor before making any investment decisions. With the right approach and the help of Fidelity Go, you can achieve your financial goals and make the most of your investment.
