Fidelity combines $0 commissions, top-notch research, and an excellent mobile app, all in a simple platform. With $0 account minimums and zero-expense-ratio index and mutual funds, this is one of the most affordable brokers. This Fidelity review will dive into the pros and cons of Fidelity’s brokerage platform and whether or not it’s right for you.
$0 stock trades
This stock broker is a good fit for: Investors wanting a one-stop-shop solution that allows them to cut costs for routine stock, ETF, options, and mutual fund trades.
Like all the best stock brokers, Fidelity charges no commission for stock and ETF trades.
Fidelity's sought-after mutual funds are highly regarded for their lengthy track records, along with competitive costs. Fidelity also charges no commission fee to buy its funds.
Fidelity is one of a handful of brokerages that offer access to international markets. It allows customers to trade on 25 different markets, though higher commissions may apply depending on the exchange.
Being able to drop into one of Fidelity's offices to speak to a representative can offer a lot of peace of mind, especially when you have issues that can't easily be solved over the phone.
Fidelity is one of the few mainstream brokers that allows investors to buy and sell fractional shares of stock. Investors can place orders for a certain dollar amount, or for a specific fractional share quantity, all the way down to three decimal points in many cases. In other words, if you want to buy 0.001 shares of Amazon.com, Fidelity will let you do just that.
Fidelity's iOS and Android apps both receive high marks from users, mainly for the versatility that allows investors to manage an array of account needs on the go. Here are the current app store ratings.
Once you’ve chosen one of our top-rated brokers, you need to make sure you’re buying the right stocks. We think there’s no better place to start than with Stock Advisor, the flagship stock-picking service of our company, The Motley Fool. You’ll get two new stock picks every month, plus 10 starter stocks and best buys now. Over the past 17 years, Stock Advisor’s average stock pick has seen a 566% return — more than 4x that of the S&P 500! (as of 6/1/2021). Learn more and get started today with a special new member discount.
While Fidelity does offer $0 options commissions trades, it's fee of $0.65 per contract is higher than many of the best options brokers.
Fidelity is better suited to investors who aren't actively trading on margin. It's higher-than-average margin rates are one reason why.
If you want a trading platform with more robust capabilities: TD Ameritrade is hard to beat with its diverse suite of investing tools, including best-in-class desktop, mobile, and online trading platforms. Combine that with high ratings for customer service, and we think this stock broker is worth reviewing for almost all investors looking for a top broker.
If you want better margin rates: Interactive Brokers is the de-facto low-cost stock broker. This is never more clear with its margin rates, which are consistently a fraction of what you'd be charged at competing brokerages.
What you pay to make a trade isn't everything, but trading costs are one of the most important reasons why investors turn to discount brokers in the first place. The table below shows how much Fidelity charges per trade or transaction, based on the type of investment.
|Stocks and ETFs||Options||Mutual funds|
|$0||$0 + $0.65 per contract||$0 - $49.95|
Bear in mind that this table reflects Fidelity's base commissions. In many cases, investors pay less than these rates, on average, thanks to free trades on certain mutual funds, including Fidelity's own proprietary mutual fund products. And its low options commissions make it competitive with the best stock brokers for options.
One of Fidelity's major advantages is that it has one of the widest selections of funds, including its own line of Fidelity funds. Combined, Fidelity account holders can purchase nearly 4,000 mutual funds and exchange-traded funds without paying a transaction fee or commission.
|Total mutual funds||More than 10,000|
|No-load mutual funds||More than 8,100|
|No-transaction-fee mutual funds||More than 3,700|
When it comes to mutual funds, Fidelity's own funds (including Fidelity index funds) are available in no-transaction-fee and no-load forms. Not only that, but some of Fidelity's own index funds have no expense ratios whatsoever.
Commissions aren't the only cost of having a brokerage account. We read through Fidelity's fee list and found a few fees that are worthy of some additional discussion.
Fidelity offers a web-based trading platform in addition to a platform for active traders. The advanced platform (Fidelity Active Trader Pro®) does not have any fees or additional costs associated with it and has no eligibility requirements.
Even the basic web-based solution is quite powerful, though, offering real-time streaming quotes through the watch list feature. Its mobile apps (available on iOS, Android, and Windows) offer the functionality you'd expect, with charting tools, and the ability to trade stocks, ETFs, mutual funds, and options right from your tablet or smartphone.
Admittedly, as long-term buy-and-hold investors, we don't demand much more from a platform other than the ability to check prices and place a trade with a few clicks. At a certain point, personal preference is ultimately the deciding factor between which platforms are "better" or "worse."
|Margin balance||Interest rate|
|Less than $25,000||8.325%|
|$25,000 to $49,999||7.825%|
|$50,000 to $99,999||6.875%|
|$100,000 to $249,999||6.825%|
|$250,000 to $499,999||6.575%|
|$500,000 to $999,999||4.250%|
|$1,000,000 and up||4.00%|
Fidelity margin rates rank toward the middle, with deep discounts for investors who have large balances. Margin loans are most cost-effective above $500,000, where there is a large step down in the interest rate charged.
Admittedly, few long-term investors use margin, and even fewer use it for long periods of time, since using borrowed money to invest can be both risky and costly. That said, if margin is central to your investing strategy, Fidelity is best for investors who use hefty, six-figure amounts of margin at a time.
Discount brokers may forgo sending you a holiday card every year, but that doesn't mean they skimp on customer support. Fidelity has 24/7 phone support for brokerage accounts. Online chat service is open Monday through Friday from 8 a.m. ET to 10 p.m. ET. (We used its live chat feature to ask about its support hours and received a response within 30 seconds.)
If you'd like to speak to someone face to face, that's as easy as visiting one of Fidelity's 197 branch offices located all around the United States. One of the benefits of working with a large financial firm is that they have the scale to offer phone support around the clock and branch offices in virtually every metropolitan area.
One area where Fidelity really shines is in research. The company boasts that it offers more research than other similarly sized discount brokerage firms. Here are a few of its research capabilities:
Fidelity also offers a number of stock, fund, and ETF screeners so you can quickly search for companies with rapidly growing earnings, funds with low expense ratios with long-tenured managers, ETFs that are highly correlated to another fund you own, and more.
Every broker has some killer feature or function that makes it a better choice for a subset of investors than another. In thinking about Fidelity's value proposition, we think it would be a good choice if most or all of the statements below apply to you.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.