what is up everyone I'm rose and welcome back to my channel this video is all
about fidelity index funds I'm gonna talk about which of Fidelity's index
funds are the best ones to invest in and I'm also gonna show you how and where to
buy them index funds are a great way to get started investing safely without
doing hours and hours of research on individual stocks they're the best way
to create a diversified investment portfolio that grows your money big time
over the long run and fidelity is known for being one of the most reputable
low-cost index fund providers I also happen to be a longtime user of fidelity
so not only do I know the platform inside out but I also take you on a tour
of my account so you can see what index fund investing at fidelity really looks
like before we get started have you subscribed to my youtube channel if not
what are you waiting for my channel is all about investing for beginners and
you're gonna learn a ton about being smart with your money so make sure to
subscribe and hit the notification bell for new videos like this every week so
let's get right into it first I'm gonna talk about the most important
criteria to look for before investing in fidelity index funds and then I'm gonna
give you a list of the best fidelity index funds that meet this criteria and
finally I'm gonna talk about how to buy them including how much to buy and in
what combination first off I don't want to assume anything so allow me to
explain what an index fund is before I get into all the other stuff an index
fund is a pooled investment vehicle that gives you an instant slice of ownership
in hundreds of different companies in one easy purchase the reason why it's
called an index fund is because the stocks in the fund are chosen by an
index rather than by some super smart overpaid money manager indexes you might
have heard of are the S&P 500 the Nasdaq and the drug Jones so an SMP 500 index
fund will have 500 stocks that are in the S&P 500 index and the Dow Jones
index fund will have the 30 stocks that are in the Dow Jones index okay now with
that out of the way let's talk about what criteria to look for when looking
for fidelity index funds and index bonds in general there's a
of things you want to look at when buying any index fund and the first
thing is the expense ratio the expense ratio is how much money is being skimmed
off the top from your investment every year in other words it's an annual fee
for investing in the fund if you want to avoid paying this fee your only other
alternative would be to go out and buy every single stock in the fund yourself
and that's obviously not feasible so I certainly don't mind paying a fee to the
index fund to do all that work for me that being said I want to keep this feet
as low as possible what can I say I'm cheap a good rule of thumb is to look
for an expense ratio of under 0.2% for example let's look at the fidelity total
market index fund or SS kax if you invested one thousand dollars in this
fund you'd pay an annual fee of only 15 cents peanuts however if you invested in
this fund the fidelity women's leadership fund your annual fee would be
one point twelve percent or eleven dollars and 20 cents a year doesn't
sound like a huge difference but compounded over time a small difference
in the expense ratio adds up to hundreds of thousands of dollars don't believe me
check this out this chart shows you the difference that fees make in your
investments a difference of one percent in annual fees reduces your nest egg
overtime by a total of $42,000 at the end of 30 years crazy so when you're
looking to invest in an index fund the expense ratio is the number one criteria
to find a funds expense ratio just pull up the funds summary page and look for
the section that says gross expensive ratio again you're looking for funds
with an expense ratio of 0.2% or less the second criteria to look for is
automatic reinvestment of your dividends let me explain when you invest in the
stock market you get dividends monthly or quarterly and every time you get a
dividend deposit you don't want that cash to just sit there you want to use
that cash to buy more stocks that way you can make money on your money your
dividend buy you more stocks which in turn pays you more dividends which you
use to buy more stocks and so on and so forth
that's called compound interest and oh my god it's like the best thing ever
this chart shows you difference between reinvesting your
dividends and not reinvesting your dividends if you invested $100,000 to
start and then you reinvested your dividends like I told you to do you'd
have over a hundred fifty two thousand dollars today but if you didn't reinvest
your dividends you'd only have eighty one thousand dollars moral of the story
reinvest your dividends and the way to do that is by investing in fidelity
index funds that are mutual funds not etf's index funds come in two forms
mutual funds and ETFs for example you can invest in an S&P 500 mutual funds or
an SMP 500 ETF they're both index funds and the end result is that you'll own a
slice of the S&P 500 index with either one but the only difference is that the
S&P 500 mutual fund index fund does automatic dividend reinvestment for you
whereas the ETF doesn't you don't get dividend reinvestment with ETFs so the
second criteria to look for when buying index funds is to make sure that it's a
mutual fund not an ETF okay now for the third criteria transaction fees
transaction fees are whatever the fun charges you to buy into the fund and
also to sell out of the fund some funds charge you for both other funds don't
charge you for either and it all depends obviously we're gonna go for the funds
that don't charge you anything right we're looking for free 99 the good news
is if you have an account at fidelity you're not gonna pay any transaction
fees to buy any of their mutual funds but if you have an account at Vanguard
for example they'll probably charge you stay like $50 is something crazy if you
want to buy a fidelity fund so again transaction fees aren't a concern for
you if you're buying in-house funds in other words you have a fidelity account
and you're buying fidelity funds but outside of that you'll probably deal
with some hefty transaction fees okay and now for the best fidelity index
funds first of all these are all mutual funds
so no ETFs on this list and second of all this list the funds is not an
explicit recommendation to buy it's just a resource to help you jump-start your
research so with that disclaimer out of the way here we go for domestic stock
the fidelity total mark index fund has an expense ratio of 0.01
5% and for international stocks the fidelity International index fund or F
SPSS is a good way to go for emerging market stock you can check out for
fidelity emerging markets index funds or FPA D X which has an expense ratio of
just point zero seven five percent for US government bonds the fidelity
intermediate Treasury bond index fund has an expense ratio of 0.03 percent and
for inflation-protected bonds the fidelity inflation-protected bond index
fund or FIP DX is a good one to look at as well and for real estate the fidelity
real estate index fund has an expense ratio of point zero seven percent as you
can see fidelity is not that creative with their index fund names it's pretty
straightforward to make it easier for you I made a handy PDF download for you
with a list of all of these funds the ticker symbols and expense ratios so
grab it below I think you'll find it super useful the link is right below
this video in the description and now let's talk about how to buy these funds
once you decide which funds you want to buy the rest is super easy you just type
in the ticker symbol in the search bar pull up the fund summary page and then
click buy but in the little trade window that pops up you'll see that you need to
specify a dollar amount all the funds I mention here don't have any investment
minimums so you can literally buy one dollar if that's all you have but
assuming you have more than one dollar to invest the question you need to ask
yourself now is how much to buy of each fund in other words what does that
allocation you want asset allocation is the particular mix
of investments that you have in your portfolio and it's the number one
decision you need to make before you pull the trigger on any of these
fidelity index funds for example if you have ten thousand dollars of investments
and four thousand is in stock funds and the other five is in bond funds then
your asset allocation is fifty percent stock 50 percent funds generally the
longer your time horizon the more you want to have in stocks it's also a good
idea to mix in other asset classes like real estate
in order to make your portfolio as bulletproof as possible throughout any
economic conditions the most basic asset allocation is doing a split between
stocks and bonds Jack Bogle the founder of Vanguard and also considered to be
the og of index funds he recommends subtracting your age from 100 and owning
that much in stocks so if you're 30 years old you'd own 70% in stock and 30%
in bonds for example if you're investing $10,000 with fidelity
you could buy $7000 worth of the fidelity total market the total market
index fund and $3,000 of their bond market index fund and that would give
you a 70/30 soft bond allocation here's a slightly fancier asset allocation
recommended by David Swensen who's the legendary manager of Yale's endowment
fund David Swensen helped Yale grow its endowment fund from 2 billion dollars to
27 billion dollars so to me whatever he recommends is gold so Swanson recommends
the following asset allocation 30% in domestic equity 15% in international
equity 10% in emerging markets equity 15% in US Treasury bonds and 15% in
inflation protected US Treasury bonds and 15% in real estate so if you have
$10,000 to invest then you're using fidelity index funds your portfolio
would have six different funds in it and look something like this again you can
refer to my free PDF download which I've linked to below and it has all the info
in there with pie charts that explain these recommended SL locations as well
as the list of fidelity index funds you can use so there you have it now you
know what criteria to look for when investing in fidelity index funds you
also have a list of the best fidelity index funds that meet this criteria and
you also know how to buy them and how much to buy of each investing doesn't
have to be hard or complicated index funds are the best way for a beginner to
start if you're sitting on some cash and you want to start putting your money to
work I highly recommend choosing one of these asset Alex
and getting started ASAP with fidelity index funds the key here is to start now
perfect later because every day you wait is another day when your hard-earned
money isn't working for you did you like this video if so then please give it a
thumbs up and if you have any questions at all about what I talked about feel
free to ask me in the comments or message me on instagram at investing
with rose to learn more about money and investing make sure you also check out
these two videos right here and if you're new to the channel I'd really
love it if you subscribed always remember to go after your dreams