You're probably overthinking your brokerage account. Most people do. They spend hours obsessing over "alpha" or trying to find that one obscure tech stock that’ll jump 400% in a week, but honestly? They’re usually just burning money on fees. If you want to actually build wealth without losing your mind, fidelity investment index funds are basically the gold standard for anyone who isn't a professional hedge fund manager. And even then, those guys often fail to beat a simple index anyway.
Fidelity has been around forever. Since 1946, actually. But they really shook things up a few years ago when they launched the ZERO series funds. No expense ratios. None. It sounded like a gimmick at first, but it’s real, and it changed the math for retail investors everywhere.
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Why Fidelity Investment Index Funds Are Winning the Fee War
Fees are the silent killer of compounding. Think about it. If you have a fund charging 0.75% and another charging 0.02%, that gap might look tiny now. It isn't. Over thirty years, that sliver of a percentage can eat six figures of your potential retirement nest egg. Fidelity knows this. They’ve positioned themselves as the "low-cost leader," directly taking on Vanguard, which used to be the undisputed king of cheap indexing.
The Fidelity ZERO Total Market Index Fund (FZROX) is the poster child here. It has a 0% expense ratio. You pay $0 to have Fidelity manage that basket of over 2,000 stocks for you. Is there a catch? Sorta. You can’t move those specific funds to another brokerage like Vanguard or Charles Schwab. If you want to leave Fidelity, you have to sell the shares, which might trigger a tax bill if you’re holding them in a taxable brokerage account. But if you’re in an IRA or 401(k)? That’s a non-issue.
The Difference Between Zero and "Almost" Zero
Don’t get tunnel vision on the zero-fee funds, though. Sometimes the classic funds are actually better. Take the Fidelity Total Market Index Fund (FSKAX). It’s not zero—it costs 0.015%. That is essentially pennies. For every $10,000 you invest, you’re paying $1.50 a year. FSKAX tracks more stocks than the ZERO version—roughly 3,900 compared to FZROX’s 2,600 or so. If you want the entire market, including those tiny micro-cap companies that might become the next giants, FSKAX gives you a broader net.
Breaking Down the Big Players
If you're building a portfolio, you don't need fifty different funds. You really don't. Most experts, like those following the Bogleheads philosophy, suggest a simple three-fund portfolio.
- A total US stock market fund.
- An international stock market fund.
- A bond fund.
At Fidelity, that looks like FSKAX for the US, FSPSX for international developed markets, and FXNAX for your bonds. The Fidelity U.S. Bond Index Fund (FXNAX) is actually a powerhouse. It tracks the Bloomberg US Aggregate Bond Index. While everyone is screaming about Nvidia and AI, this fund is quietly doing the heavy lifting of protecting your downside. It’s cheap, transparent, and does exactly what it says on the tin.
What About the S&P 500?
Everyone loves the S&P 500. It’s the benchmark. It’s what the news talks about every night. If that’s your vibe, the Fidelity 500 Index Fund (FXAIX) is probably where you’ll land. It tracks the 500 largest companies in the US. Apple, Microsoft, Amazon—the usual suspects. It’s incredibly efficient. Because these companies are so liquid, the fund’s tracking error is almost nonexistent. It’s a boring way to get rich, which is usually the best way.
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Real Talk: The "Active" vs. "Passive" Debate
Fidelity isn't just an index shop. They’re famous for active management—think Peter Lynch and the Magellan Fund back in the day. But even Fidelity’s internal data often shows that for most people, the passive fidelity investment index funds outperform the high-priced "genius" managers over long periods.
When you buy an index fund, you’re admitting you don’t know which specific stock will win. And that’s okay. You’re betting on the entire economy instead. It’s less stressful. You don’t have to check the tickers every morning. You just buy, hold, and go live your life.
Liquidity and Tracking: The Nerd Stuff
One thing people overlook is "tracking error." This is basically how well the fund actually follows the index it's supposed to mimic. If the S&P 500 goes up 10%, but your fund only goes up 9.8%, that's a problem. Fidelity is world-class at this. Their institutional-grade trading desks mean they execute trades so efficiently that the gap is nearly invisible. This is especially true for FXAIX.
Then there's the "spread." In an ETF, you have to deal with the bid-ask spread—the difference between what buyers want to pay and what sellers want to get. With Fidelity's mutual fund versions of these indexes, you trade at the Net Asset Value (NAV) at the end of the day. No spreads. No worrying about whether you got "filled" at a bad price at 10:00 AM.
Avoid These Common Traps
Don't just chase the highest past returns. It’s a classic rookie mistake. Just because the Fidelity Blue Chip Growth Fund (which is active, not an index) crushed it last year doesn't mean it will next year. Stick to the indexes.
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Also, watch out for "overlapping." If you own an S&P 500 fund and a Total Market fund, you're essentially owning the same companies twice. The S&P 500 makes up about 80% of the Total Market's value. You aren't diversifying by owning both; you're just complicating your taxes. Pick one and stay the course.
Taxes Matter More Than You Think
If you’re investing in a standard brokerage account (not a retirement account), mutual funds can sometimes hit you with "capital gains distributions." This happens when the fund manager sells stocks inside the fund. Even if you didn't sell your shares, you might owe taxes.
Fidelity has gotten much better at managing this, making their index funds very tax-efficient. However, if you are extremely tax-sensitive, you might look at Fidelity’s ETFs, like FENY for energy or FTEC for tech, though these aren't the broad-market "total" indexes most people need for a core portfolio.
Actionable Steps for Your Portfolio
Stop waiting for the "perfect" time to buy. Market timing is a loser's game. If you have $5,000 or $50,000 sitting in a savings account earning 0.01%, you're losing value to inflation every single day.
First, check your account type. If you’re using a Roth IRA or 401(k), go for the ZERO funds (FZROX, FZILX). They are literally free. There's no reason not to take the free lunch.
Second, simplify. You don't need a "sector" fund for AI or Green Energy. Those are bets, not investments. A broad-market fund like FSKAX already owns those companies. You already have exposure to the "next big thing" without the risk of picking the wrong horse.
Third, automate. Set up a recurring transfer. Every payday, have $200 or $500 or whatever you can afford go straight into your chosen fidelity investment index funds. This is called dollar-cost averaging. You buy more shares when prices are low and fewer when they’re high. Over time, it smoothens out the volatility.
Finally, ignore the noise. The market will crash. It’s a mathematical certainty that at some point in the next decade, your portfolio will look "red." That’s when the index fund strategy matters most. People who panic and sell lose. People who keep their auto-investments running during a crash are the ones who end up retiring early. Fidelity’s platform makes it easy to set it and forget it. Do that. Your future self will be significantly wealthier because you chose the boring, low-cost path.