Fidelity has made it easier for average investors to join

Gold dollar sign in a bird's nest

Fidelity Investments has slashed the investment minimums on 22 of its mutual funds from $10,000 to $2,500, making it much easier for average investors to purchase these funds.

Included in the list are Fidelity's Spartan index funds, which have rock-bottom expense ratios.

These funds give investors broad market exposure, with choices such as the Spartan 500 Index Fund that tracks the S&P 500, the Spartan International Index Fund that tracks the total return of foreign stock markets and the Spartan Small Cap Index Fund that tracks small U.S. companies.

The Spartan 500 fund charges an expense ratio of 0.095% annually, meaning that if you invested the minimum $2,500, you’d pay just $2.38 in annual fees. The Spartan Emerging Markets Index Fund charges 0.31%, and the Small Cap Fund charges 0.30%.

That's well below what we consider the maximum 1% expense ratio you should tolerate in funds you buy.

If you don't already invest with Fidelity because you couldn't meet the previous $10,000 minimum investment threshold, now is a great time to give the brokerage a second look, whether you're just starting to create a portfolio or you already have a portfolio that might benefit from a switch to lower-cost funds.

There are other compelling reasons to consider parking your investments at Fidelity.

Fidelity offers 200 of its own mutual funds with no transaction fees (commissions).

Fidelity Fund Growth

Fund Name 2013 Performance
Spartan 500 Index Fund 6.83% YTD
Spartan International Index Fund 2.77% YTD
Spartan Small Cap Index Fund 7.83% YTD
As of March 1, 2013

You can also invest in other companies’ funds through your Fidelity account, and many of these have no transaction fees, either.

Fidelity also charges no trading commissions on 30 low-cost iShares, exchange-traded funds that cover a wide range of investment categories, from bonds to emerging markets.

Stock trade commissions are just $7.95.

Popular account types, including rollover IRAs, Roth IRAs, traditional IRAs, brokerage, cash management and 529s cost nothing to open and have no annual fees.

Now is a particularly good time to examine your investments because the April 15 deadline for contributing to an IRA or self-employed retirement plan for 2012 is approaching.

For 2012, you can contribute up to $5,000 to a traditional or Roth IRA ($6,000 if you’re 50 or older). Those amounts increase to $5,500 and $6,500 for 2013.

Fidelity lets you open an IRA with a $2,500 minimum or a $200 monthly automatic contribution.

Fidelity’s low-cost funds might also be available through your employer-sponsored retirement plan.

wad of cash in a nest

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Investors with a bit more cash can take advantage of the new lower investment minimums on Fidelity’s Advantage Class shares. The old minimum was $100,000; the new minimum is $10,000.

The difference between the $2,500 minimum Investor Class shares and the $10,000 minimum Advantage Class shares is that the latter have lower expense ratios.

For example, the net expense ratio for Fidelity’s Spartan 500 Index Fund is 0.095% for Investor Class shares and 0.06% for Advantage shares.

These differences are slight — $3.50 per year for every $10,000 invested — but can add up over a lifetime of investing, especially as your nest egg grows.

If you already have $10,000 in a qualifying fund, Fidelity should have automatically converted your shares from the higher-cost Investor Class shares to the lower-cost Advantage Class shares.

These expense ratios are guaranteed through the end of this year for some funds and through various dates in 2014 for other funds.

Expense ratios could rise after these dates, or a continued need to compete with other low-cost brokerages could entice Fidelity to keep the expenses down.

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