Investing in mutual funds is a core strategy for building wealth and achieving long-term financial goals. Fidelity Investments is one of the largest providers of mutual funds, offering a wide range of equity, bond, and index funds. Many investors, however, prefer to manage all their investments through a single brokerage platform like TD Ameritrade.
This guide provides a step-by-step walkthrough for purchasing Fidelity mutual funds through TD Ameritrade, covers associated fees, alternative strategies, and answers the most commonly asked questions.
Understanding Fidelity Mutual Funds and TD Ameritrade
Fidelity Mutual Funds
Fidelity offers a wide selection of mutual funds for different investment objectives, including:
Fidelity 500 Index Fund (FXAIX): Tracks the S&P 500 Index for broad exposure to large-cap U.S. stocks.
Fidelity Total Market Index Fund (FSKAX): Provides exposure to the entire U.S. stock market.
Fidelity ZERO Total Market Index Fund (FZROX): A no-expense-ratio fund covering the total U.S. stock market.
Fidelity mutual funds are known for their research-driven management, diversified portfolios, and historical performance. They are suitable for investors seeking long-term growth, income, or a combination of both.
TD Ameritrade
TD Ameritrade is a brokerage platform that offers a wide array of investment options, including stocks, ETFs, and mutual funds. In 2024, TD Ameritrade merged with Charles Schwab, but the platform continues to provide its users with access to Fidelity funds and other third-party mutual funds. Investors can manage all their holdings from a single account, making portfolio oversight and diversification easier.
Availability of Fidelity Mutual Funds on TD Ameritrade
TD Ameritrade offers Fidelity mutual funds in two categories:
No Transaction Fee (NTF) Funds: Many Fidelity funds are available without paying a transaction fee. NTF funds are ideal for long-term investors who want to avoid trading costs.
Transaction Fee Funds: Some Fidelity funds may carry a purchase fee when traded through TD Ameritrade. The fee varies based on the fund and can impact smaller investment amounts.
It is important to verify the current list of available funds on TD Ameritrade before purchasing, as availability can change.
Step-by-Step Guide to Buying Fidelity Funds Through TD Ameritrade
1. Log in to Your TD Ameritrade Account
Start by accessing your TD Ameritrade account via the official website. If you do not have an account, you must create one by providing personal details, financial information, and funding your account.
2. Navigate to the Mutual Fund Section
Once logged in, locate the “Trade” tab on the main navigation menu. Under this tab, select “Mutual Funds” to access the fund trading interface.
3. Search for Fidelity Funds
Use the search feature to locate the Fidelity fund you want to purchase. Enter the fund's ticker symbol (e.g., FXAIX) or its full name.
4. Review Fund Details
Before buying, review important information about the fund, such as:
Investment objectives
Holdings and sector allocations
Performance history
Fees and minimum investment requirements
This ensures the fund aligns with your investment goals.
5. Place Your Order
Click “Trade” or “Buy” once you have selected your fund. Enter either the dollar amount you wish to invest or the number of shares. Confirm the order and submit your purchase.
Fees and Costs to Consider
When buying Fidelity funds through TD Ameritrade, the following costs may apply:
Transaction Fees: Some funds may have purchase or redemption fees.
Short-Term Redemption Fees: Selling shares within 30–90 days may trigger a short-term fee, imposed by the fund company.
Account Maintenance Fees: TD Ameritrade generally does not charge standard brokerage account maintenance fees, but review fee schedules to avoid surprises.
By selecting NTF funds, you can often eliminate transaction fees altogether.
Alternatives to Buying Fidelity Funds Through TD Ameritrade
1. Open a Fidelity Brokerage Account
Investing directly with Fidelity provides access to the full range of mutual funds without transaction fees. Fidelity accounts also offer tools for retirement accounts, education savings accounts, and taxable brokerage accounts.
2. Use Fidelity FundsNetwork
Fidelity FundsNetwork allows investors to access hundreds of third-party funds in addition to Fidelity’s own offerings. Many funds in the network are available with no transaction fees.
3. Consider Fidelity ETFs
Fidelity ETFs provide similar diversification benefits to mutual funds but trade like stocks with no trading fees on TD Ameritrade. ETFs are ideal for investors seeking liquidity and intraday trading flexibility.
Popular Questions About Buying Fidelity Funds Through TD Ameritrade
Q1: Can I buy all Fidelity mutual funds through TD Ameritrade?
A1: No. TD Ameritrade provides access to many but not all Fidelity mutual funds. Some funds may require a transaction fee, and certain niche funds may be unavailable.
Q2: What is the minimum investment for Fidelity funds on TD Ameritrade?
A2: Minimums vary by fund. Many Fidelity index funds have a $0 or $2,500 minimum, while actively managed funds may require $2,500 or more.
Q3: Are there fees to sell Fidelity funds on TD Ameritrade?
A3: Selling NTF Fidelity funds usually has no fee. However, if sold within a short holding period, short-term redemption fees may apply.
Q4: Can I automate investments in Fidelity funds on TD Ameritrade?
A4: Yes. TD Ameritrade offers automated investment options, including recurring purchases for certain mutual funds.
Q5: How do dividends from Fidelity funds work on TD Ameritrade?
A5: Dividends are automatically credited to your TD Ameritrade account and can be reinvested in the fund or withdrawn to your cash balance.
Q6: Is it better to buy Fidelity funds directly or through TD Ameritrade?
A6: Buying directly from Fidelity can give access to all funds without fees. TD Ameritrade is convenient for consolidating all investments in one account, though some funds may carry fees.
Q7: Are there tax implications when buying Fidelity funds through TD Ameritrade?
A7: Yes. Mutual fund purchases themselves do not trigger taxes, but capital gains, dividends, and redemptions may have tax consequences depending on your account type.
Conclusion
Purchasing Fidelity mutual funds through TD Ameritrade is a viable option for investors who want to consolidate accounts or manage a diversified portfolio in one platform. Understanding the steps, fees, and available alternatives can help investors make informed decisions.
For those seeking broader fund access with no transaction fees, opening a Fidelity account may be more suitable, while TD Ameritrade remains a convenient option for those prioritizing account consolidation and easy trading.
By following the steps outlined in this guide and reviewing the Q&A, investors can confidently navigate the process of buying Fidelity mutual funds through TD Ameritrade, aligning their investments with long-term financial goals.