Changing your investments on Fidelity takes just a few clicks, but the exact steps depend on whether you’re using a standard brokerage account, an IRA, or a workplace retirement plan like a 401(k). The process also differs depending on whether you’re swapping mutual funds, selling stocks or ETFs to buy new ones, or simply redirecting future contributions. Here’s how each scenario works.
Swapping Mutual Funds With an Exchange
If you’re moving money from one mutual fund to another, Fidelity offers a single-step “exchange” that sells one fund and buys another in the same transaction. This is the simplest way to change your holdings without leaving cash sitting uninvested between trades.
To do it, go to Accounts & Trade > Trade, then select the account you want to use. Click Trade Mutual Funds, then choose the option labeled “Sell a Mutual Fund and use the proceeds to buy another mutual fund.” Follow the prompts to pick the fund you’re selling, the fund you’re buying, and the dollar amount or share quantity. Review the order and submit.
An exchange works only between mutual funds. If you want to move from a mutual fund into an ETF or individual stock (or vice versa), you’ll need to place two separate orders: a sell, then a buy once the proceeds settle.
Selling and Buying Stocks or ETFs
For stocks and ETFs, there’s no exchange option. You sell the position you want to exit, wait for settlement, then use the proceeds to buy something new. Navigate to Accounts & Trade > Trade, select your account, and place a sell order for the security you want to unload. Then place a separate buy order for the new investment.
Since May 2024, stocks, ETFs, and bonds settle on a T+1 basis, meaning the cash from your sale is available the next business day. So if you sell on a Monday morning, you can typically use those funds to buy a new investment by Tuesday. Mutual funds generally settle one or two business days after the trade date, depending on the fund. Keep this timing in mind if you’re trying to move money quickly.
Changing Investments in a 401(k) or Workplace Plan
Workplace retirement plans run through a separate platform called NetBenefits, and the process is different from a standard brokerage account. Log in at NetBenefits, find the Quick Links menu for your plan on the home page, and click Change Investments.
You’ll see two distinct options: Change Future Investments and Change Current Investments. This distinction matters. Changing your future investment elections tells Fidelity where to direct new contributions from your paycheck going forward, but it won’t move a single dollar of the money already in your account. Likewise, moving your existing balances between funds won’t change how new contributions are allocated. If you want to do both, you need to make two separate changes.
Your plan may also offer an automatic rebalancing feature that periodically realigns your existing balances back to your target percentages. Not every employer plan includes this, but it’s worth checking under your plan’s investment options or settings.
Fees to Watch For
Fidelity doesn’t charge commissions on stock, ETF, or Fidelity mutual fund trades. But there are a few fee traps that can catch you off guard when switching investments.
- Short-term trading fee: Fidelity charges a fee each time you sell or exchange shares of a FundsNetwork no-transaction-fee (NTF) fund that you’ve held for fewer than 60 days. This doesn’t apply to Fidelity’s own funds or money market funds.
- Fund-level redemption fees: Some mutual funds charge their own short-term redemption fee, separate from anything Fidelity imposes. Check the fund’s prospectus before selling.
- Back-end loads: If you bought a load fund (common with Class B or Class C shares), you may owe a contingent deferred sales charge when you sell. These charges often start around 5% to 6% if you sell within the first year and decline each year you hold the shares. Class C shares typically charge 1% if redeemed within the first year and nothing after that.
For most people using Fidelity’s zero-fee index funds or commission-free ETFs, none of these apply. But if you own third-party funds through FundsNetwork, check for fees before placing the trade.
Tax Implications Depend on Account Type
In a tax-advantaged account like a 401(k), traditional IRA, or Roth IRA, you can change investments freely without triggering any tax consequences. The money stays inside the tax shelter regardless of how many trades you make.
In a taxable brokerage account, every sale is a taxable event. If you sell an investment for more than you paid, you owe capital gains tax. Investments held longer than one year qualify for long-term capital gains rates, which are lower than ordinary income tax rates for most people. Investments held one year or less are taxed as short-term gains at your regular income tax rate. If you sell at a loss, you can use that loss to offset gains elsewhere on your tax return.
Fidelity tracks your cost basis and generates the tax forms you’ll need at year-end. But if you’re making changes in a taxable account, it’s worth checking your unrealized gains and losses before you trade. You can find this on your positions page under the “Cost Basis” or “Gain/Loss” column.
How to Set a Target Allocation and Stick to It
If you’re changing investments because your portfolio has drifted from your original plan, consider setting up a system so you don’t have to do this manually every few months. Within a 401(k) on NetBenefits, look for an auto-rebalance option that periodically brings your holdings back to your target percentages.
In a brokerage or IRA account, one low-maintenance approach is using a target-date fund or a balanced fund that handles rebalancing internally. These funds automatically shift their stock and bond mix over time, so you don’t need to place trades yourself. Fidelity offers its own target-date fund lineup (Fidelity Freedom Funds) with no minimum investment and no transaction fees.
If you prefer to pick your own funds but want some structure, write down your target allocation (for example, 70% stocks, 30% bonds) and check it once or twice a year. When any category drifts more than five percentage points from your target, use the exchange or trade process described above to bring it back in line.