Table of Contents
Introduction
Investing can be quite complex, and if you are new to finance, it can be quite confusing. Due to the number of choices available it sometimes seems as if no one has a clue where to start. That is where the robo-advisors like Fidelity Go come in. Fidelity Go is a automated investment service that was established to assist in the investment process and make it available for everyone. In this article, we will discuss five strategies that will help you get the most out of your money with Fidelity Go.
1. Determine Your Risk Tolerance
Before making the first step towards investing with Fidelity Go, it is crucial to define what risk tolerance is. This concept refers to the fluctuations in the value of your investments that you are comfortable with. Fidelity Go has a risk assessment that helps in identifying your risk tolerance. It takes into account your age, your financial goals, and your investment expertise. Based on your answers, Fidelity Go will recommend a portfolio that is suitable for your level of risk.
Honesty is important when filling out the risk questionnaire. Overestimating your risk tolerance may result in you having a more risky portfolio than you can handle. On the other hand, underestimating your risk tolerance may stop you from getting higher returns. Knowing your risk tolerance and making sure that your investments reflect this can help you get the most out of your investments with Fidelity Go.
2. Learn From the Bot, It Will Show You the Way
A great benefit of using Fidelity Go is the ability to have the account rebalanced automatically. Rebalancing is the process of readjusting your investments so that they are in line with your target asset mix. This is due to the fact that some investments will perform better than others at one time or the other and this will cause the portfolio to be unbalanced. For example, if the stocks perform very well, then they will take a bigger share of your portfolio than you intended to have.
Fidelity Go offers the automatic rebalancing of your portfolio to ensure that it stays on the right track as per your risk preferences. If stocks are currently more prevalent in your portfolio, Fidelity Go will sell some and reinvest the proceeds in other assets to achieve the desired balance. As a result of using automatic rebalancing, you can ensure that your portfolio is well diversified and therefore improve your returns.
3. Consider Tax Loss Selling
Tax-loss harvesting is an approach that involves the sale of investments that have lost value in order to offset capital gains and reduce taxes. Tax-loss harvesting is offered by Fidelity Go. If any of the investments in your portfolio suffer losses, Fidelity Go will sell those and reinvest the proceeds into similar investments so that your portfolio remains consistent with your investment goals.
This strategy is useful in minimizing your taxes while at the same time increasing your after tax returns. Nevertheless, tax-loss harvesting may not be suitable for everyone. It is especially useful for those in higher tax brackets and those with taxable accounts. Before you can use this strategy, it is important to seek the advice of a tax expert in order to fully understand the advantages and disadvantages according to your situation.
4. Take Advantage of Fidelity’s Low Costs
When it comes to investing, fees can eat up a large portion of your returns over time. For that reason, it is important to look at the fees that any investment service offers. Fidelity Go is more expensive than traditional financial advisors, but it is cheaper. With an annual advisory fee of 0.35% on your invested assets, this rate is lower than the industry average.
Using Fidelity’s low fees means that you get to keep more of the investment returns. It may seem like a small difference in fees but it can make a big difference to your overall returns over the years. When choosing an investment service, it is important to consider the fees and Fidelity Go gives you a way to invest and get the most out of your money.
5. Stay Informed and Monitor Your Investments
Although Fidelity Go manages your portfolio’s trading activities on a daily basis, it is still important to know what is going on with your investments. Stay current on the market and economic news that may impact your portfolio. Fidelity Go provides daily and weekly market reviews to keep you up to date.
Furthermore, it is crucial to revisit your portfolio every so often and ensure that it still suits your financial goals and risk appetite. If you have a change in circumstances or if your objectives change then it may be necessary to make some alterations. To this end, you can make informed decisions and get the most out of your Fidelity Go account by staying current and watching your account.
Conclusion
Fidelity Go presents a user-friendly and budget-friendly platform for investing. By grasping your risk tolerance and taking advantage of features like automatic rebalancing and tax-loss harvesting, along with keeping informed and monitoring your portfolio, you can enhance your returns with this service. Remember, investing carries risks, and it's crucial to conduct your own research or consult a financial advisor before making any financial commitments. With the right approach and Fidelity Go's assistance, you can reach your financial objectives and get the best out of your investment.
