Is Fidelity Investments a Good Option for People Interested in Gold?
Interested in a Gold IRA and already have some retirement accounts with Fidelity? Maybe you're just curious to see what one of the biggest names in finance has to offer in terms of precious metals investing? It's easy to see how an established name in the industry like Fidelity could be an excellent choice for someone looking to expand diversification into such assets. But like many things in the world of investing, the answer is a bit more complicated than that.
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Fidelity Review
You might commonly hear that the most expensive thing you'll ever deal with in life is buying a home, and that might be the single largest individual expense. However, retirement might cost more on the whole. That's why it's necessary to invest for many years to be ready for it.
Your retirement fund needs to accomplish several things. It has to provide you with the necessary income for your golden years, it needs to cover health care expenses when they're likely to be the greatest, and it should even keep growing as much as possible. You need it to be big enough to handle all that and last for several decades, and anything you get from the government then in terms of Social Security is seriously unlikely to be enough by itself.
Fortunately, one thing the government gives you right now is the option of individual retirement accounts. These tax-advantaged investment options help you get your portfolio ready for retirement, and using them for investing in precious metals specifically lets you maintain your wealth while diversifying your portfolio. You need a broker for a gold IRA, and I think you should know that Fidelity is one such option.
Fidelity Investments
Bottom Line
While Fidelity does offer many exceptional services to their clients, Self-Directed IRAs (aka Precious Metals IRAs) are not one of them. Not only do they not offer Self-Directed IRAs themselves, but a branded alternative. They also do not handle precious metals transactions themselves. Opting instead, to work with a 3rd parth: FideliTrade. Complicating things unnecessarily.
At a Glance
- Minimum IRA Investment: $1,000
- Annual Fees: Fidelity hands gold IRA clients off to FideliTrade, who in turn says the trust company handles fees, none of which are listed online.
- Promotions: None available at time of writing.
Standout Features: Fidelity Investments has over 50,000 employees and manages trillions in assets, so the company can be a one-stop shop for wealth management, brokerage services, and retirement planning.
PROS
- Famous name in the world of money matters
- Huge company with 50,000 employees
- Company manages trillions in collective assets
CONS
- Fidelity has a third-party vendor handle precious metal transactions
- The extra company means there are additional costs
What is Fidelity Investments?
Fidelity Investments is a company that offers brokerage services, wealth management, and retirement planning to many clients. Brokerage services include being able to buy and sell stocks. Clients can also access ETFs and mutual funds through Fidelity.
Wealth management is crucial to anyone who has saved up or invested enough money. Fidelity can help investors identify specific financial goals they would like to achieve and assess their risk tolerance. From there, they can start making investments appropriate to such objectives.
I don't have to tell you that retirement planning is a common goal in wealth management. Fidelity helps investors balance maintaining their portfolio value while still growing it. Tax considerations, healthcare spending, and estate planning can all factor into this.
Edward C. Johnson II started the company in 1946 as Fidelity Management & Research. The company started doing 401(k) products around 1982 and moved into computerized stock trading two years later. Services for overseas markets were spun off in the early 1980s.
Fidelity started its first ETF in 2003. The company moved to its new Boston headquarters in 2012. Cryptocurrency trading was offered to institutional clients in 2019.
Fidelity's managed assets have measured as high as $3 trillion. Revenue has been reported as high as nearly $21 billion annually. The company's operating income has been nearly $7 billion at some points.
In recent years, Fidelity has announced plans to expand hiring to tens of thousands of workers. It also announced plans to introduce cryptocurrency investing as a 401(k) option. Despite the company's age and legacy, it's working to keep up with industry developments as they happen.
With tens of thousands of employees and trillions in assets under its management, Fidelity Investments is one of the largest providers of wealth creation and management. Clients enjoy multiple services all under one brand. However, I should warn you that doesn't always mean Fidelity is great at everything that it does.
Does Fidelity Offer Gold IRA Services?
Fidelity does offer investors the possibility of creating a gold IRA. This is an IRS-sanctioned IRA where you can invest in precious metals and hold them over time. There can be many benefits to holding such an account.
Any IRA has tax advantages to it. However, a precious metal IRA is likely to have other benefits. They can include watching precious metals grow in value over time and serving as a balancing element to a diversified portfolio as precious metals can hedge against inflation and economic instability.
Having said that, Fidelity doesn't really handle precious metal matters on its own. The company uses a third party to take care of such things, and involving a middleman inevitably means more fees and complexity for consumers. Fidelity also does many, many things, so gold IRAs are hardly something they specialize in.
I'll honestly admit that Augusta Precious Metals might be worth a look if you want a great gold IRA option. That's all they do, and they do it really well. Augusta is known for excellent customer service, streamlined operations that minimize fees, and a strong commitment to customer education.
Gold Services Provided
Fidelity Investments offers many gold-related services and products. Precious metal IRAs are some of them. However, they also offer gold stocks, gold funds, and gold ETFs.
The company has a Direct Investing program clients can buy gold, silver, and even platinum through. There are many ways to buy these metals. However, these are all considered paper assets.
You can access mutual funds that invest specifically in precious metals. They typically focus on gold and silver. Such funds let you get exposure to the precious metals market without actually buying and storing physical metals on your own.
Two to consider include the Fidelity Select Gold Portfolio and the Fidelity Advisor Gold Fund. FSAGX puts more than half of its total assets into gold alone. FSHAX has a slightly lighter allocation of around 35% allocation into gold assets.
You can also use exchange-traded funds to invest in gold and silver. Fidelity offers ETFs that invest in the precious metals industry by buying into gold and silver mining companies. One popular gold ETF is iShares Gold Trust, also known as IAU.
ETFs offer unique benefits, including improved tax efficiency and better liquidity than mutual funds. Also, ETFs are often cheaper to buy or sell. Many charge under $1 for trades, and Fidelity has a number of ETFs available free of commission.
It's also possible to invest in individual gold or silver mining operations via their stocks. Goldcorp Inc., or GG, is a popular option. So is Newmont Mining Corporation, or NEM.
Using non-IRA gold investing possibilities through Fidelity Investments does mean not getting to take advantage of the tax benefits of individual retirement accounts. That usually means you can only spend taxed income on such products or services and not pre-tax like you would with an IRA or 401(k). You'll also have to pay sales taxes on these transactions, and the capital gains taxes can vary but be in full force.
However, there are also benefits to buying gold and silver products or services outside of a tax shelter. You are free to sell them at any time instead of waiting until later in life to take withdrawals or distributions. You can access the money for goals other than retirement, such as refinancing debt, buying a home, or putting someone through college.
Buying precious metal “paper” assets, such as stocks or funds, can have tremendous advantages, however. You don't have to physically store gold or silver since you wouldn't directly own it. Such things can take up room and prove a security or theft risk, one that your private insurance might not be likely to cover without significant paperwork.
Without the burden of personal ownership and the responsibility that entails, you can still benefit from any expansion or growth in the precious metals industry as new mines are discovered and accessed. Demand often goes up over time because precious metals aren't just a source of wealth preservation but are also used in everything from industrial applications to jewelry in many cultures around the world.
Fidelity Gold IRA Review
Fidelity Investments is a company you can buy paper investments through, such as stocks, bonds, mutual funds, and ETFs. You can also invest in precious metals. These start with gold and silver but might also include platinum and palladium.
Gold IRAs are possible, and Fidelity insures them for as much as $1 million in total value for your financial security and peace of mind. Fidelity also makes it possible to liquidate precious metals for cash so you don't have to take personal possession of them when you sell. That's a great convenience.
However, a gold IRA with Fidelity is not technically an SDIRA, or self-directed individual retirement account. They use a second company to manage such things. That takes some power out of your hands, and I think that's not good.
While Fidelity involves itself in many different kinds of investments, it seems to back away from precious metals. The company lets an affiliate handle such matters. That affiliate's name is FideliTrade, and the extra set of hands involved adds needless complexity and extra cost.
FideliTrade isn't registered with FINRA or the SEC. However, this entity does handle precious metal transactions and custodial services for precious metal investors working with Fidelity Investments. Because of this, gold you buy through Fidelity might not actually be considered a self-directed IRA.
Fidelity Investments might be a great company to work with for its core services of wealth management, brokerage options, and retirement planning. However, they might not be such a smart move for the precious metals component of your portfolio. Looking for dedicated precious metal brokers might be the right idea.
If you look for precious metal IRA brokers, then Goldco is a name that's going to come up a lot. They set the standard for customer service in the industry, and they excel at it. You'll be taken care of well by them, but their minimum investment levels might be too high for some investors.
I also think that Birch Gold is a precious metal broker that's worth a good look. They feature a delightful combination of customer service, client education, and reasonable fees. You get a good balance of many positive features through this service provider.
Noble Gold can be a great option to look at if you're looking for a dedicated precious metal IRA broker that has low minimum investment levels. Most of the time, they only require $2,000 to get started. That makes precious metal investing in an IRA format accessible to far more investors.
Augusta Precious Metals is another precious metal IRA broker to consider. In fact, it might be the best option to consider. This company's customer service rates are higher than nearly anyone else, and they back that up with client education that is definitively better than everyone else.
The difference in customer service levels between Goldco and Augusta is nearly impossible to distinguish because the two are so far ahead of most of the industry. Augusta has an A+ rating from the Better Business Bureau. They also average 5/5 on Trust Link.
How to Buy and Hold Gold in a Fidelity IRA
A gold IRA is usually a self-directed IRA. That means you make the investment choices. This is in contrast to investing in a mutual fund where a fund manager makes the decisions.
Typical gold IRA decisions include how much to invest, what specific metals to invest in, and what custodian or storage depository to use. Most precious metal brokers have customer service personnel who can help you through all of that. It gets complicated with Fidelity.
When buying precious metals through Fidelity, you have to call them. You can't do it online. That's not really all that different from anyone else, if I'm going to be fair.
Precious metal prices change all the time. If you're familiar with the term “spot price”, then you know it fluctuates based on trading at the time. Even dedicated precious metal IRA brokers want you to call in.
However, a dedicated gold IRA broker lets you handle everything with one person, often an assigned account representative that works for you personally. With Fidelity Investments, a second company is involved that handles precious metal matters for them. That creates two headaches for you.
First, it's another party involved with the whole process. That slows things down. It also means more work involved in getting your account going.
Second, it takes a lot of power out of your decisions. Your options are going to be far more limited than by using a dedicated gold IRA company that specializes in such matters. They can help you craft something that really works for you.
A gold IRA normally takes one phone call to get started, and a dedicated broker will walk you through most of the paperwork. All you have to do is answer some questions and sign a few forms. Fidelity IRAs require extra work because a third party is included, and it's not the kind of work that yields you any additional benefits.
Alternatives to Fidelity Investments
Augusta Precious Metals
Goldco
Birch Gold Group
Augusta Precious Metals is worth a good look because they're one of the best names in the business. Many industry analysts consider them to be one of the top two brokers, and a lot of them will even list them as the very best. Nearly every analyst puts them in their top five.
This is a reputation that Augusta has earned over many years and through many clients because of their dedication to running a very unique organization. They streamline their operations to keep overhead low so you pay smaller fees. However, they're also very efficient at both customer service and client education.
In fact, they offer dedicated departments for both, which is rare. Something unique to Augusta is clients getting face time with their own internal analysts. Some of them were trained at the business school at Harvard.
If working with Fidelity Investments appeals to you because of the size of the company and the prestige behind the name, then you should also consider Goldco. This precious metal broker has long set the standard for customer service in the industry, and they've stayed in that position for many consecutive years. That's despite how much Augusta and a few others have caught up to them in terms of high-caliber customer care.
Goldco's treatment of its clients is often described as being “white glove”. That can be important if you're investing tens of thousands of dollars. Given Goldco's minimum investment levels, you have to be of considerable financial net worth to work with them, however.
Birch Gold Group usually has lower minimum investment requirements than Augusta or Goldco. They're also really good at customer service, and they have very effective client educational resources, too. You can learn a lot about the industry while you're with them so you can self-direct your account better.
- Minimum Investment: $50,000
- Annual Fees: $250 first year/$200 recurring
- Promotions: up to 10 years fees waived
- Minimum Investment: $25,000
- Annual Fees: $230 first year/$180 recurring
- Promotions: first year fees waived with qualifying purchase
- Minimum Investment: $10,000
- Annual Fees: $250 first year/ $200 recurring
- Promotions: first year fees waived with qualifying purchase
Alternatives to Fidelity Investments
Augusta Precious Metals
Augusta Precious Metals is worth a good look because they're one of the best names in the business. Many industry analysts consider them to be one of the top two brokers, and a lot of them will even list them as the very best. Nearly every analyst puts them in their top five.
This is a reputation that Augusta has earned over many years and through many clients because of their dedication to running a very unique organization. They streamline their operations to keep overhead low so you pay smaller fees. However, they're also very efficient at both customer service and client education.
In fact, they offer dedicated departments for both, which is rare. Something unique to Augusta is clients getting face time with their own internal analysts. Some of them were trained at the business school at Harvard.
- Minimum Investment: $50,000
- Annual Fees: $250 first year/$200 recurring
- Promotions: up to 10 years fees waived
Goldco
If working with Fidelity Investments appeals to you because of the size of the company and the prestige behind the name, then you should also consider Goldco. This precious metal broker has long set the standard for customer service in the industry, and they've stayed in that position for many consecutive years. That's despite how much Augusta and a few others have caught up to them in terms of high-caliber customer care.
Goldco's treatment of its clients is often described as being “white glove”. That can be important if you're investing tens of thousands of dollars. Given Goldco's minimum investment levels, you have to be of considerable financial net worth to work with them, however.
- Minimum Investment: $25,000
- Annual Fees: $230 first year/$180 recurring
- Promotions: first year fees waived with qualifying purchase
Birch Gold Group
Birch Gold Group usually has lower minimum investment requirements than Augusta or Goldco. They're also really good at customer service, and they have very effective client educational resources, too. You can learn a lot about the industry while you're with them so you can self-direct your account better.
- Minimum Investment: $10,000
- Annual Fees: $250 first year/ $200 recurring
- Promotions: first year fees waived with qualifying purchase
Final Verdict
Fidelity Investments can be a very powerful ally to you if you want to buy stocks, bonds, and funds. The company is also a great resource to have available to you for managing wealth and planning for retirement. However, proper retirement portfolio diversification should also include investing some in precious metals, and Fidelity might fall short in that regard.
If you want to handle all your money matters under one umbrella, then it is possible to have Fidelity handle precious metal investing for you along with everything else. However, you should know that they hand that off to another business. That's honestly kind of surprising considering how Fidelity has tens of thousands of employees and could easily specialize in precious metal investing just as much as they are dedicated to many paper-based investment asset classes.
Using a dedicated precious metal broker for your gold IRA makes sense since they specialize in it. Pretty much any dedicated gold IRA broker will involve fewer steps and make it easier for you to invest in gold and silver. Your gold IRA will actually be a self-directed IRA with more benefits, and I think you'd be happier with that.