Our bottom line
Fidelity’s fees are a little steep compared to other options. However, if you’re new to investing, you may find that it’s worth paying extra for its tools and expertise. Fidelity makes it easy to find investments and funds to match your specific needs. You don’t need a deep understanding of the markets to make informed decisions about your savings.
Top feature of Fidelity’s Investment account
Fidelity’s ‘Pathfinder’ tool makes it easy to find an appropriate investment fund – even if you know nothing about the markets. Simply select whether you want to invest for income or growth, then decide how much risk you’re willing to bear. Once you’ve done this, Fidelity gives you a list of suitable funds, making it easy to compare fees and performance. Fidelity’s pooled funds are managed for you. All you have to do is monitor the performance and add new savings whenever you’re ready.
Fidelity’s commission prices
Fidelity charges £10 to place online stock trades, which is about average for the industry. However, trading over the phone costs £30. If your account is set up to reinvest dividends, these trades cost £1.50 each.
Fees you should know about
Fidelity charges a small annual fee – typically based on a percentage of your account balance:
- On less than £7,500, you pay £45/year (or 0.35% with a regular savings plan)
- On £7,500-£250,000, you pay 0.35% per year
- On £250,000-£1million, you pay 0.20% per year
You always pay the lowest possible rate on your total balance. For example, if you have a £500,000 balance, you’d pay £1,000/year in fees (0.20% total). You would not pay 0.35% on the first £250,000, then 0.20% on the second. You also don’t pay for any amount over £1million. If you have a high net worth, this may be an important benefit. No matter how much you invest, you can only pay up to £2,000 in fees. Do remember, however, you also incur fees for holding ETFs and managed funds. For instance, Fidelity’s ‘Balanced Income’ fund has a 0.96% management fee. Suppose you invested £100,000 into this fund. You would pay £1,310 per year (0.35% for your account, plus 0.96% for the fund). Although these percentages sound small, they shouldn’t be overlooked. If you’re investing for the long-term, even a small difference in fees can have a big impact on your compounded returns. If you’re investing under £7,500, I’d suggest setting up the regular £50/month savings plan. This means you avoid the £45 flat fee.
Buying shares and ETFs with Fidelity
If you’re new to investing, placing your first trade can be stressful. You know what you want from an investment, but you don’t know which stocks and ETFs fit your needs. Fidelity’s tools help solve this problem. You can search for stocks based on a set of preferences. For example, suppose you’re looking for a 4-6% dividend yield. You can select this as one of your options. Fidelity gives you a list of stocks that currently pay this amount. You’re shown each company’s long-term and short-term performance, so you can see how they rank before you buy.
Fidelity is also connected to Morningstar (a respected rating service for investment funds). You can search for ETFs based on their score. Just be aware that the “best” investments may not be the best value. Stocks and funds with a strong track record are seldom overlooked by the markets. It’s why stocks like Amazon are so expensive. If you’re unsure about the suitability of an investment for your circumstances, you’ll want to seek out your own independent financial advice.
Fidelity’s platform
You can place secure online trades from Fidelity’s website, or from your mobile device with a downloadable app. You can also buy and sell over the phone, although at £30 per trade, this is by no means cheap. You’ll probably find the platform most useful if you’re unsure where to invest. Fidelity’s ‘Pathfinder’ tool is ideal for beginners. This helps you find appropriate funds based on your specific needs. Simply choose how you wish to invest – for income or growth. Then decide how much risk you’re willing to accept. (Of course, high-risk investments could lose you more money, but often have the chance of much higher returns.) Fidelity then gives you a list of suitable options. Once you’ve chosen a fund and made a deposit, its expert analysts manage everything on your behalf.
Fidelity’s research offerings
Fidelity’s tools are most useful for comparing different investments. Once you’ve selected your preferences for a stock or ETF, you’re shown a list of suitable options. You can see how each company ranks in terms of performance and profitability. Select up to seven companies to shortlist for closer comparison. Fidelity presents you with key ratios – like price-to-earnings and price-to-earnings growth. You can also hit the ‘Chart Growth’ button to see what each stock would have returned you over a given period – from one day up to 10 years.
Service and support
Fidelity’s call centres are based in the UK and Ireland. What’s more, unlike with some rival companies, the phone number is clear and easy to find. If you’re choosing a brokerage for a large portion of your savings, the ability to call a Freephone local number makes a huge difference. Of 1,167 Trustpilot reviews, Fidelity scores 4.1 stars, which is reasonably high compared to many of its peers.
Is Fidelity right for you?
Your biggest consideration with Fidelity will probably be the fees. This account is not your cheapest option by any stretch. However, if you’re a novice investor, or want others to do the hard work for you, these added costs may be worth your while. If you’re investing less than £7,500, you should commit to the £50/month savings plan. Otherwise, you’d pay an annual £45 flat fee. Again, £45 may not sound like a lot, but on a £1,000 balance, it would mean paying 4.5% in fees. That is, to my mind, far too expensive for a brokerage account. High net-worth individuals may find the fees negligible because you only pay the 0.20% fee up to £1million. No matter how much extra you invest, you cannot pay more than £2,000 per year in account fees.
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