Fidelity Setup

This is how I have my Fidelity accounts setup, investment/allocation strategy, and the reasoning behind my decisions. Also see [Investing].

TODO: clean this up, definitely see [Investing] for current allocations.

You would have 4-5 actual accounts with Fidelity:

Retirement/Investment accounts:

A pre-tax IRA account
A post-tax Roth account
Optional, a separate taxable brokerage account, if you want your taxable investments separate from your incoming/savings cash management brokerage.

Cash Management Accounts:

Incoming/savings brokerage account
Outgoing/checking Cash Management Account(CMA)

Retirement/Investment accounts

Your 1-3 investment accounts would be allocated per the 1-4 fund Boglehead method(s) which actual allocation may differ from person to person, depending on their long-term safety margin, but for me the answer seems to be a 2 funder:

FZROX (total stock) 100%

Regardless you should probably only choose from the list @ [https://www.bogleheads.org/wiki/Fidelity] for your investments, unless you have a fun money allocation where you play with individual stocks or are trying to time the market somehow to beat the returns(which usually ends up being bad for you). Or go play around in the Bogleheads Investing forum, as there has been loads written/debated about the best possible investments.

No idea what the best deal on funds for taxable investment accounts yet. Maybe a Vangaurd total stock and total bond ETF, despite the sales fee(though you would ideally only sell once a year max) . More research required here around Tax Lost Harvesting(TLH) and tax advantaged funds, etc. You should not hold Bond funds(FXNAX) in a taxable account, as taxes are definitely incurred on all earnings from a bond.

Cash Management(or your checking/savings accounts):

Outgoing/CMA should hold enough for 1 months expenses, topped off each month. The $’s should not be held in the core account, but in the MMF that’s paying the best (FTEXX at the time of this writing). Check quarterly/yearly.

Reasoning: There are rare(maybe once a year, if you are unlucky), but documented, cases where fidelity may not be able to auto-pull from your brokerage account and sell your Money Market (MM)/core(SPAXX) to cover expenses. To avoid this, don’t link the brokerage and have your brokerage just top up your CMA every night, as needed. Also, rather than rely on auto-funding, just move over what you need for the next month.

Incoming/savings Brokerage(that maybe isn’t actually linked to your CMA)

Should hold ~ 1-3 months of your emergency fund, and is a great place for your income(paycheck, direct deposits, etc) to get dumped into.

This money should be tied up in a Money Market(MM), whichever is currently paying the best from the below list with these caveats:

If your state has no income tax,then just pick the one with the highest (30 day) payout. If your state has income tax, and there is a fund with your state’s name in it, then buy that MM.

Reasoning: a state named MM fund will almost certainly have state tax benefits(like no taxes on any income generally), assuming you live in that state.

For me, no state income tax, so I just buy the highest performing one(currently FTEXX) that I can buy.

Your sweep/core account(SPAXX) should always hover/trend around $0, as a MM fund above will pay more, and your top up to core will auto-sell your MM fund to fund your outgoing/checking account).

Check the list on a quarterly or yearly basis(can chase returns more often if you really wanted), or a big economic event is happening(example: covid)

list of MM funds with yields: [https://institutional.fidelity.com/app/tabbed/dailypricing/FIIS_PP_SP28_DPL3.html?tab=dailypricing&productLineId=3&navId=325&previousDay=true&pos=T]

The rest of your Emergency fund, if any, should be in a safe cash like investment, whatever is paying more from this list:

Treasury bills (buy direct through fidelity, no fees)
CD’s (buy direct through fidelity, or use a bank like ally if they are paying more)
HYSA (High yield savings account, typically Ally, Allied Credit Union or a local to you Credit Union with a special deal)

Reasoning: You should earn roughly inflation and maybe even beat inflation a little from whatever is the highest paying from the above list. The highest paying changes occasionally, recommend checking for new highest paying on a quarterly or yearly basis, or a drastic economic event happens(like say covid). This is mostly about how lazy/invested you want to be in your finances, you could chase returns and move money around daily/weekly if you wanted…

Other Fidelity setups

[https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop|Bogleheads Fidelity as one stop shop page]

Setup auto fill of your outgoing account

Fidelity Manage Cash, select your outgoing account, then on the bottom right, is manager cash manager. Then fill out the form.

Cash Manager Settings

Fidelity® Cash Management Account   Individual - TOD (X--------)
Cash Manager Status Active
Overdraft Protection    YES (Your money will be moved automatically)
Overdraft Alert YES Add/Edit Alert Delivery
Minimum Target Balance  YES (Your money will be moved automatically)
Minimum Target Balance Amount   $1,000.00
Minimum Transfer Amount $250.00
Minimum Target Balance Alert    YES Add/Edit Alert Delivery
Maximum Target Balance  NO
Maximum Target Balance Amount   None
Maximum Target Balance Alert    NO
Funding Accounts and Hierarchy  1. Individual - TOD (X----------)

Account Numbers: instead of prefix “39900000” check’s numbers have shorter prefix - “7710”.

Why Fidelity

It’s generally cheaper in real $’s than competitors(and certainly is cheaper for me)
It has what amounts to a [https://www.fidelity.com/cash-management/fidelity-cash-management-account/overview|checking account] unlike [https://investor.vanguard.com/corporate-portal/|Vanguard].
It’s ran by a [https://en.wikipedia.org/wiki/Abigail_Johnson|woman].