HOWTO: Open and fund Roth IRA accounts
- open Brokerage and CMA Accounts @ fidelity
- Open a ROTH IRA @ Fidelity
- send up to $6k/year into Roth and buy VT
- use the CMA like a checking account.
NOTE: This is written for my loved ones, if you are not one, then some things (obviously) do not apply to you.
If you are not using the Mobile App, use the website, instructions: HowtoViaWeb.
1. Open Brokerage and Cash Management Account(CMA) account @ Fidelity.
Instructions for MobileDownload the 'Fidelity' app from your app store. There is also a 'Fidelity Spire' app, that I have little experience with(it's brand new).
select 'open account', it will ask which account type, select brokerage.
It will give you a pop-up asking if you already have an account, select no (since you don't yet).
Then it will ask you if this is an individual or joint account. Select individual.
Next it asks for your personal information.
Then it will ask you optionally, how many trades per year you are expecting. I'd select 0-25 trades per year.
Next is Identification Verification, Where they put an address you've been associated with, then counties. Then companies you have been with.
Then it will ask about your Employment information. If you pick employed it'll bring up employee information
Next it asks about your CORE holding. SPAXX should be the default, and that's fine.
After that, there's a review and confirm page.
Then a bunch of agreements and asking you to verify your SSN # (which they call your "Taxpayer Identification Number".
Basically a bunch of verification and agreements. FUN huh?! :)
kind of makes one want to have my own agreements for them that are equally confusing and obtuse!
Next it will ask for log in information, Create username and password. Use Bitwarden to generate the password.
Then Security Question. I use Bitwarden to generate those as well (as the random words password generator) and then save as extra information in bitwarden.
I'd probably login to the app and then create the account.
After creating the CMA account (much quicker!)
it will ask you to fund the account, skip this for now.
I'd skip setting up Direct Deposit until after you get the debit card in the mail, as you will probably want the debit card before you start using it as your normal account.
Transferring your C360 money.
I can do it for you, probably easiest (and fastest).
Unfortunately you can't link the existing C360 accounts to Fidelity directly, because the Fidelity accounts are wholly yours, where the C360 accounts are shared between you and I.
- Create a new C360 account, wait a few days for it to open, then link the new C360 account to Fidelity, then transfer money (probably take a few weeks).
- Wander to the closest USPS office and write yourself a money order from your C360 debit card. Deposit to Fidelity using the mobile check app(or mail it in) takes 3-5 days
- Make me do it for you(typically happens in 3-5 business days). I will need the Fidelity routing and account number. From the app: Select the account's summary tab, scroll down to the very bottom and select 'View Account and Routing Number' screenshot and send to me. This should probably be the one labelled 'Savings' above(but can also be the CMA account if you prefer that -- wherever you want all the incoming money to go). I won't take the money from C360 until the new $$'s land in Fidelity though.
2. Open Roth IRA Account
After you have your 2 fidelity accounts open(brokerage and CMA), then open a new account, a ROTH IRA account. This is a special tax-advantaged account the IRS lets us open.
- Invest up to your W-2 income limit OR $6,000 whichever is smaller; per tax year(so April 15 -> April 15th).
- Once the money is in your ROTH-IRA it can not be taken out for 5 years.
- No taxes are ever due on any money you make in this account!
- TODO: link to all the other obscure IRS rules, like house down payment $'s, etc.
Instructions from app
select 'Accounts' then 'Open an Account' then scroll down to 'ROTH IRA' and select orange 'Open Account'.
Pretty simple just reconfirming info.
3. Invest in the ROTH IRA account
I will fund the first $500 for this account. After that, for every dollar you put in, I will match you dollar for dollar. However, opting for this means I will stop your monthly "allowance" money into your C360 account. (This is a way better deal for you anyway, so take it!)
You can invest up to $6,000 per year or up to your W-2 income limit per year, whichever is smaller. So a maximum of $6k/year can go into your ROTH IRA account.
When you transfer money into it from either your savings or checking account it will end up in a CORE investment(SPAXX) you will have to select 'trade' and buy VT with the entire $'s you have available in the ROTH IRA account.
Login to the app.
Then select 'Transact' then 'Transfer'.
FROM: Savings (the account that has the $500 I gave you)
TO: ROTH IRA
It will show the contribution year, and the limits and how much you have contributed so far($0).
Verify it's all correct, then 'Submit'.
Then go to 'Transact', then 'Trade' Account: ROTH IRA Symbol: VT Action: BUY Amount: $500.00
Select 'Preview Order'
verify it's all correct, and then 'Place Order'.
Every time you make a contribution to your ROTH you will need to transfer the $'s in, and then buy VT with the money you just transferred.
4. Use the CMA for checking.
Your C360 account is linked/shared to me, so I can see all of your transactions there, and instantly move money back and forth. Not such a great thing now as you are moving to more independence. I suggest you use the CMA account as your main checking account now, as it won't be anyone's name but yours, nobody but you gets to see your transactions, etc.
So Direct Deposit should probably go here(hint use your new Fidelity CMA account) TODO: link to page about recommending to savings account 1 month buffer build, etc.
For savings money, I recommend putting that money in FIKFX, which will earn you a little but primarily keep your money safe. For long-term holdings you should over-fund this account a little. TODO: link to more about this.
For cash money, you can either leave it in the CORE account, or buy a fixed-income money market fund. I currently buy FTEXX as it's the best paying money market fund, instead of holding the money in CORE(SPAXX). It will auto-sell FTEXX whenever you use your debit card, or bill-pay, etc.