Are you looking for a safe place to stash your cash for retirement? Are you an investor with a high account balance (and not a beginner or active trader)? If you can answer yes to both of these questions, you may want to check out Fidelity Money Market Funds.
Who is Fidelity?
Headquartered in Boston, Massachusetts, Fidelity Investments, Inc. is an American corporation offering a variety of financial services – including, annuities, mutual funds, IRAs, 401(k)s, 529 plans, investments funds, life insurance, checking accounts and even credit cards.
Edward Johnson founded Fidelity in 1946. Since that time, the company has worked to implement programs and money service platforms to meet the needs of consumers across the globe and keep up-to-date with the latest technological advancements.
Over the years, Fidelity has grown into one of the most trusted and likable brands of their kind due to their focus on helping consumers with long-term planning and generating positive investor value through their transparent and fair pricing models.
As of 2018, they are one of the world’s largest broker-dealers with approximately $2.46 trillion under their asset management.
What is A Fidelity Money Market Fund?
Money market funds are fixed-income mutual funds. They invest in high-quality, short-term debt. In other words, many consumers consider money market funds one of the safest investments you can make. Money market funds protect your cash from market risks, and if you’re in one of the highest tax brackets and investing outside of your retirement account, you may be able to reduce your tax exposure with a tax-exempt money market fund.
Money market investors buy shares in a fund, which in turn buys short-term debt from government, bank or corporate entities, such as U.S. Treasuries, certificates of deposit or commercial paper. Money market funds are popular because they can quickly be turned into cash or used to fund a new investment opportunity. Money market funds are much less volatile than the stock or bond markets, making them a safe place to stash your cash.
Four important features that Fidelity’s Money Market Funds offer are: stability, liquidity, competitive yields, and potential tax advantages.
Furthermore, it is important to note that the FDIC does not insure money market funds; however, funds in this type of account are prone to less market fluctuations due to federal regulations on the level of risk companies like Fidelity are able to invest your money in.
Types Of Fidelity Money Market Accounts
Fidelity offers 3 types of money market accounts.
Fidelity Government Money Market Fund
If choose the “government” money market fund, Fidelity will invest at least 99.5% of your assets into government securities and repurchase agreements. This type of account would be good for an investor who is looking to earn a return on their money while they are saving or waiting to invest further funds.
Fidelity Prime Money Market Fund
With Fidelity’s Prime Money Market Fund, the assets assigned to this account type are typically invested in a combination of U.S. government securities, corporate securities and/or repurchase agreements. Additionally, they could also be invested in commercial paper, certificates of deposit, corporate notes, and other private instruments from domestic and foreign issuers. This account type may be used as a retirement or non-retirement account.
Fidelity Municipal Money Market Fund
In Fidelity’s Municipal Money Market Fund, you can expect at least 80% of your assets to be invested into municipal securities. Municipal securities are exempt from federal income tax, so this account may be right for you if you are in a higher tax bracket and have some short-term savings goals that you’d wish to yield tax-free.
Does the FDIC Insure Fidelity’s Money Market Funds?
Fidelity Money Market Funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC).
Therefore, investors concerned about the lack of insurance may wish to consider a money market savings account offered by a bank, since the FDIC insures those accounts up to $250,000.
What Are The Advantages and Disadvantages of Fideliey’s Money Market Funds?
Here is a breakdown of the pros and cons of Fidelity’s Money Market Funds:
- No or low fees when your cash joins or leaves the fund.
- Helpful customer support.
- Stability and security.
- The fund distributes income to investors on a monthly basis.
- In addition, Fidelity will work to diversify your portfolio to decrease overall risk.
- Ideal for meeting short savings goals effectively.
In contrast, here are some of the disadvantages:
- High minimum balances for new accounts ($50,000-$100,000 depending on account type).
- Low returns (money market funds aren’t a great tool for building long-term retirement savings).
- Money market funds carry a risk of losing value.
- Furthermore, the FDIC does not insure money market funds.
How Do I Get A Fidelity Money Market Account?
To sign up for a Fidelity Money Market Account, you can complete the process over the phone or online.
How To Access Fidelity’s Online Application:
- Visit Fidelity.com
- Secondly, Click “Open an Account” located at the top of the page.
- Next, Determine which account type you would like to open and click the specified button for your preferred account type.
- Create a “user account” with your email address and preferred password.
- Provide Fidelity with your personal information (Social Security Number, Birth date, contact details, employment information).
- Finally, Fund your account (you’ll need an account number and routing number from your bank or brokerage account number if you’re moving assets from another brokerage firm).
How Do I Contact Fidelity About My Money Market Account?
Furthermore, you can contact Fidelity using any of the following methods:
- Call Fidelity at 800-343-3548 or 800-972-2155
- Hours: Monday through Friday 8am EST – 8pm EST
- Chat with a Fidelity Representative via Fidelity.com.
- Send a secure email by logging into your account online or via the Fidelity mobile app.
Should I Open a Fidelity Money Market Account?
Fidelity is a company that has been around more than 73 years and is considered a reputable company in the eyes of consumers.
Above all, the answer to the question of if you should open one of these accounts depends on your individual situation and the return you’d like to see on your investment.
Our suggestions is that you should consider Money Market Funds as a short-term investment vehicle only.
That said, Fidelity’s Money Market Fund options would probably work really well for you if you are a retirement investor with a relatively high account balance… In other words, you really can’t beat the company’s robust array of low-cost funds.