Originally published at: https://www.personalfinanceclub.com/fzrox-fnilx-fzipx-and-fzilx-fidelitys-zero-fee-funds/
For the record, this isn’t a paid post (in fact, I have never done a paid post). I’m also not necessarily endorsing Fidelity, although it is the brokerage I primarily use for about 95% of my liquid assets.
That said, it’s pretty cool Fidelity identified the race to the bottom on minimizing fees on index funds and decided to go nuts and just offer zero cost index funds. They even made clever ticker symbols for them (Zero, Nil, Zip, Zilch…. get it?!)
You can make a pretty formidable index fund portfolio with these. Something like 70% FZROX and 30% FZILX would be an awesome two-fund portfolio that essentially covers the entire planet’s publicly traded stock markets. Together they own 4,658 US and international stocks, weighted by market cap, at zero cost, zero fees and zero minimums. That’s pretty darn compelling.
That said, my regulars know that I’m still a lover of dumping 100% of your portfolio in a single target date index fund. Fidelity target date index funds charge a 0.12% annual fee. That’s pretty darn close to zero. They also come with the benefit of rebalancing automatically and reallocating towards bonds as you age. I think those benefits outweigh the cost.
Either way, they’re both different types of good. Whatever you choose, remember to “stay the course”. Bouncing around based on what the market is doing or the latest tip you’ve heard is a good way to lose to the market.
And as always, remember the most important thing is to build wealth by following the two PFC rules: 1.) Live below your means and 2.) invest early and often.
– Jeremy