If you’re pursuing the “Financial Independence, Retire Early” (FIRE) lifestyle, people may assume you’re aiming to be a 30-year-old retiree. And perhaps you are seeking to leave the workforce decades ahead of your peers. Or, like plenty of FIRE seekers, you may be more focused on the financial independence aspect — putting your money to work so you can get by on the income from your investments, giving you the freedom to live and work on your own terms.
Regardless of your goals, if you’re chasing FIRE, you pretty much have to do three things:
- Keep your costs low.
- Invest aggressively and early.
- Choose income-producing investments.
Here are three index funds that fit the bill for any FIRE strategy.
1. Fidelity ZERO Large-Cap Index Fund
The Fidelity ZERO Large-Cap Index Fund (NASDAQMUTFUND:FNILX) is basically an S&P 500 index fund by another name. Officially, its benchmark index is the Fidelity U.S. Large Cap Index. That happens to include almost all the same stocks as the S&P 500 index. But by not advertising it as an S&P 500 index fund, Fidelity avoids licensing costs, so it can offer the ETF with absolutely no investment fees — which is what makes it so appealing to thrifty FIRE enthusiasts. The fund also has no minimum investment.
It’s one of four fee-free mutual funds Fidelity started offering in 2018. The other three are:
- Fidelity ZERO Total Market Index Fund (NASDAQMUTFUND:FZROX), which invests across nearly every company in the U.S. stock market using an index similar to the Russell 3000;
- Fidelity ZERO Extended Market Index Fund (NASDAQMUTFUND:FZIPX), which invests across an index of U.S. mid-cap and small-cap stocks that’s similar to the S&P Completion Index;
- Fidelity ZERO International Index Fund (NASDAQMUTFUND:FZILX), which uses a benchmark comparable to the MSCI ACWI Ex USA Index to cover foreign markets.
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