How to make changes to your Fidelity 401(k) portfolio

Make sure your Fidelity 401(k) is working for you

Making changes to your Fidelity 401(k) portfolio can help you make sure that your retirement savings are in line with your unique situation and financial goals. As a general principle, financial planning experts suggest investors should be:

• more aggressive when you have a long investment horizon until retirement, because you’ll be able to ride out market volatility to increase your potential for higher returns
• increasingly conservative as you approach retirement, to protect what you’ve gained

Before making changes to your investment account, make sure you’ve considered all of the investment options in your 401(k) plan. (Most employers offer around 20 options).

We want to make it easy for you to make changes to your Fidelity 401(k) portfolio—so we’ve laid out a step-by-step guide below.

Step-by-step guide to make changes to your Fidelity 401(k) portfolio

1. 1. Log in to Fidelity, and select the account you’re looking for.
   2. Click on “Investments” on the main menu.
   3. Click on “Change Investments” on the secondary menu.
   4. You’ll need to change the current investments in your portfolio, as well as change your investment elections for any future contributions to this account.
   5. Start by changing the investment elections for any future contributions to this account by clicking on “Change Investment Elections”.
   6. Click on “Select Funds”. 
   7. In the dropdown menu, choose which source you’re changing investment elections for. If there is more than one item in the dropdown menu, you’ll need to do the following steps for each item.
   8. Input the desired % allocation to each of the funds.
   9. After inputting the desired % allocations, continue on to save your changes.
   10. Next, you’ll also have to change the current investments in your portfolio.
   11. Navigate back to the “Change Investments” screen. Click on “Exchange Multiple Investments”.
   12. Click on “Start Your Rebalance”.
   13. Input the desired % allocation to each of the funds. Then continue on.
   14. On the “Select Your Rebalance Option” page, choose “Rebalance my account now, one time”.  Click on “Next”.
       1. Note: you can also choose “Rebalance my account now, and sign me up for Automatic Rebalance, to reset my desired allocations”, however your account may have fees associated with this option.
   15. Review your changes, and click on “Submit”. You’re all done!

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What is a Fidelity 401(k)?

A 401(k) plan—at any financial institution—is a retirement plan that’s sponsored by your employer. With a 401(k), your retirement savings contributions are automatically deducted from your paychecks, and sometimes your employer might match the money you put in up to a certain percentage.

One thing to keep in mind: 401(k)s tend to be more limited as far as investment strategy and asset allocation are concerned. In most cases, your 401k plan will allow you to choose from a variety of index funds or mutual funds, including target-date funds that focus on meeting your retirement goals by a specific year (the year you retire). If you’re looking for an account that allows you more investment options, an IRA, or individual retirement account, may be worth considering. Many self-directed IRAs allow you to choose from stocks, bonds, and other investment options to help increase diversification and custom-build your portfolio to your risk tolerance.

Why would you want to change your investments in your Fidelity 401(k)?

It’s important to make investment decisions based on both your short-term financial situation—and your longer-term investment horizon. For example, as you move through your career and approach retirement age, you may want to choose less risky asset classes, such as those heavier in bonds, in order to protect the returns you’ve seen and avoid undue losses.

On the other hand, if you’ve noticed that your account isn’t growing at the rate you’d like, and you still have a long investment horizon (i.e., won’t be retiring for a decade or longer), it may make more sense to lean into stocks and other asset classes that could increase your overall investment performance and allow you to see greater returns over time.

What other ways can you change your investments?

Along with changing which investment opportunities you’re buying into, you can also change how much of your paycheck you’re contributing toward your investments each period. This is especially important if you’re working at a company that offers a 401(k) match, which is essentially free money. While the best investment advice is sought from professionals, in the majority of cases, contributing at least up to the match is a good idea.

Additionally, as mentioned above, you may decide you want to seek investment opportunities with a different account type, such as an IRA. Because these accounts often come with more robust investment tools and access to different types of asset classes, you stand to see higher investment returns, along with simply becoming more skilled in investment research. (Plus, they’re not tied to your employer, so you can keep the account no matter what happens with your job.)

Is changing your investments the same thing as rebalancing?

Not necessarily—although rebalancing also requires changing your investments.

Rebalancing specifically refers to the practice of adjusting the weight of different asset classes in your portfolio. For example, if you have a long investment horizon, you may build a portfolio or 80% stocks and 20% bonds, which means relatively higher investment risk but also higher potential investment returns. However, if you’re quickly approaching retirement, you may choose to opt for a less risky account balance, such as 50% stocks and 50% bonds.

Obviously, in order to rebalance your portfolio, you’ll need to change your investments. But you can also choose to buy and sell assets simply to shift which organizations or commodities you’re investing in, without changing the weight of each class in your total portfolio.

The bottom line

Changing the investments in your Fidelity 401(k) can help ensure you meet your long-term financial goals while maintaining short-term financial stability and respecting your risk tolerance. And fortunately, the whole thing can be done online in just a few minutes.