How to Invest

The Four Keys to Successful Investing
In today's environment, simplicity is priceless. The daily news tracks the ups and downs of the financial markets, but understanding the long-term impact is often difficult. Unanticipated national and world events change the market direction rapidly and unexpectedly, often confusing investors about what to do. Some investors will end up chasing yesterday's winners, some will stay on the sidelines and miss out on great opportunities to profit, and others will become so disenchanted that they stop investing altogether. 

However, there is a better way to invest. Investors who are clear about their investment goals and use the right approaches will be well rewarded. For example, using the right tools can help you to identify the best investments to buy and sell to avoid dangerous market volatility. Another important consideration is asset allocation, the percentage of capital to invest in a given investment, to maximize results and minimize risks.

We believe that the
four keys to successful investing are the
selection of the right investments for a given investment goal, the timing of buy and sell decisions, the smart management of money in your account, and the discipline to take action when needed.



How to Improve Investment Returns
The unfortunate truth is that the average investor did not profit much from his or her investments in the last ten years. The 8% to 10% average annual returns that were so common in previous decades are no longer seem to be available. Investors may feel frustrated, when they cannot count on the steady growth of their life savings to finance future goals, such as retirement or college education. 

The reality is that we no longer live in the 90s or in the 80s when investment gains were easily available using the buy-and-hold strategy. We believe that the years ahead will require new and more flexible approaches. That's why we created the FidelitySignal website.

FidelitySignal provides model portfolios designed specifically for Fidelity mutual fund investors. The model portfolios utilize technical analysis indicators as part of an advanced algorithmic system. Following the buy and sell signals issued for the model portfolios makes it easier to manage investments, therefore resulting in more consistent results.



Discover the Top Six Features of our Investing Technology
After subscribing to FidelitySignal, you will have access to a signal page for each model portfolio. Our system uses four signals to make the portfolio positions simple to follow: BUY, HOLD, SELL and CASH. The top section of each page provides instructions for what to do when a new signal is issued. The bottom section displays information about asset allocation, performance, and history. The portfolio signal pages are updated daily after the closing of the market.



Example portfolio signal page




Additional Information
Calculations assume reinvested dividends and capital gains distributions.

Taxes, investment expenses and fees can vary by investor and by brokerage account and are not included in the m
odel portfolio balance calculations.

The model portfolios are designed with a bias towards long-term holding periods whenever market conditions allow
. Consequently, no sell signal will be given following a fund purchase until it is held for at least one month. This rule also allows investors to comply with mutual fund policies that discourage excessive trading and frequent exchanges, as described in the respective fund prospectuses.

The commencement date for the investment model was July 4, 2010. Results shown prior to that date are based on mo
del back testing using historical data.



Investment Risks

1. Principal investment risks 

These risks are described in the prospectuses of the mutual funds. Please read the fund prospectus before investing.

2. Risk of inaccurate execution of trading signals

The buy and sell signals must be followed precisely in order to obtain the investment results tracked by the model portfolio pages.

Signals occur infrequently, however the immediate execution of the corresponding fund purchase or sale is needed 
to utilize our system, as the value of investments can change dramatically in rapidly moving markets.

3. Losses due to sharp market declines

Not every trade is expected to be a winner, as shown in the "PORTFOLIO HISTORY" section of the portfolio signal pages. For example, the investment model aims to take small losses when a sharp reversal occurs in the financial markets to avoid the much larger losses that can potentially be caused by holding on to losing positions for an extended time period. 


Ready to invest? Our model portfolios make investing easy. Get started today!

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Just Subscribed, What's Next?
If you just subscribed to FidelitySignal and already have a brokerage account that allows investing in Fidelity mutual funds, then this section will explain what to do next. For additional information, please read the "Are You New to Investing?" section below.

First, log in to your FidelitySignal account and check the current signals for the model portfolios. If a new signal is shown, follow the instructions given on the top section of the screen. If no new signal is issued for the day, than no action needs to be taken.

You will typically see only a few BUY or SELL signals per year, since our model is designed for longer term holding periods. Consequently, it is not unusual for a HOLD or CASH signal to be in effect for several months.

How to place the first mutual fund purchase?
  1. Wait for the next buy signal and then invest: To mirror the results of a model portfolio, wait for the next BUY signal, which can take a single day or several months, depending on market conditions. This is the preferred method used by most investors.
  2. Scale in over a period of few months: An alternate option is to commit a small starting amount of money right away, but be prepared to hold the newly purchased fund for at least 31 days*. Since in this case, you purchased the fund after the BUY signal was issued, on rare occasions, there may be a SELL signal before the end of your 31-day period. 
  3. Buy all investments in your chosen model portfolio at once: Using this method you can enjoy immediate gains in a strong bull market. The risk of this option is catching a market top.

Example: You just signed up and after reviewing the available strategies you decide to mirror the Armageddon model portfolio in your Fidelity brokerage account using option 2 (see above). Let's assume that the Armageddon portfolio is fully invested in this example. As the first step, log into your Fidelity brokerage website and purchase one of the mutual funds listed in the PORTFOLIO ASSET ALLOCATION section on the portfolio signal page. Use an investment amount that matches the percentage shown for the fund in the pie chart. 

After purchasing the first investment wait 31 days and then choose the next mutual fund for purchase. Wait another month again and then purchase the third fund. Repeat these steps for all the funds in the portfolio. If you get a sell signal while scaling in then log into your brokerage account and sell the corresponding mutual fund holding, but only if you held it for at least a month. Following these steps will result in your portfolio mirroring the Armageddon model portfolio within a few months.


* The 31 day holding period is needed to comply with the short-term redemption rules of the mutual fund, also referred to as the Fidelity excessive trading policy. Violating this policy may trigger trading restrictions and associated fees. Please consult with the fund prospectus and your broker for more details. Please note that a few of the funds used in our model portfolios do charge a small redemption fee if the shares are held for less than 90 days, but still can be sold after the 31-day holding period without any restrictions.



Setting Preferences
Your member profile and E-mail preferences can be changed after logging in to the FidelitySignal website.

Change member profile: 
  • Edit your personal information on the “Subscribe | Edit your member profile” page by selecting “Edit profile”.
Set E-mail alert preference:
  • When you first subscribe to FidelitySignal the E-mail alert feature is automatically set. You can turn off this feature, or later on add it back if needed, on the “Subscribe | Edit your member profile” page by selecting “E-mail subscriptions” and “Edit profile” options.



Are You New to Investing?
You may know people who made money on investments, and you may be curious about how to invest, but do not know where to start. To help you get started, the section below will walk you through the beginning steps.

First, become familiar with the FidelitySignal website. For example, click on the "Strategies" menu and read the information provided for each model portfolio. Next, choose one or more of the model portfolios that fits your investment goals and subscribe to become a member.


New investors often start with one of the more conservative model portfolios, such as the Armageddon Portfolio or the Conservative Growth Portfolio. Once you become more comfortable with investing, you can explore the growth oriented investment choices as well, which require more trading and can have different risk profiles.

Next, identify a broker with online access and sign up for a brokerage account. We provide the buy and sell signals, but you will have to log in to your new brokerage account to execute the trades.

When selecting a broker, evaluate the fees and the potential restrictions for purchasing Fidelity mutual funds. Many of our investors choose a broker with "No Load" and "No Transaction Fee" access to the Fidelity funds in our model portfolios. On the other hand, the larger the amount you invest, the less important the impact of a small flat-rate transaction fee becomes. Fidelity.com is a good place to start your evaluation, but it is not your only choice, as almost all major brokerage companies offer Fidelity mutual funds.
 

The next question to decide is how to fund your new brokerage account. Most of the Fidelity mutual funds require a minimum of $2,500 balance for taxable accounts, while some mutual funds allow a $500 minimum for IRA accounts.

So you can start with as little as $2,500 or $500 for IRA accounts. In this case,
choose a single fund from one of the model portfolios and follow the buy/sell signals of that mutual fund only.

The different model portfolios hold different numbers of mutual funds, ranging from three to 27. Refer to the signal page for the details on the investment allocations to calculate the starting amount needed for a given portfolio.

The next step is to transfer the money to your brokerage account and wait until you are ready to make the first mutual fund purchase.

Now you have access to your chosen model portfolio and your brokerage account is ready to go. This is a good time to request the prospectuses from your broker or directly from Fidelity.com for the mutual funds listed in the "Fund Selection" section of the signal page of your chosen portfolio. Please read the fund prospectuses carefully so you fully understand their methods and risks.

Congratulations, now you are ready to invest! Go to the "Just Subscribed, What's Next?" section at the top of the page to take the next steps.


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