Fidelity's New Zero Funds - Free Index Fund Investing Is Here!

I have to admit I was excited when Fidelity announced their
new Zero Index Funds. They now offer new
Total Market, International, Extended Market, and Large Cap Index Funds with
zero annual expenses. This is a
fantastic development for long term passive investors like myself. Over the long term, the expenses charged by
fund managers can significantly eat into an investor’s returns. For instance, $10,000 invested in the an
S&P 500 index fund over 30 years at an 10% rate of return will have a final
portfolio value of $174,494.02. If that
mutual fund were to charge 1% in fees, the annual return lowers to 9%. After 30 years the portfolio would be worth
only $132,676.78. That’s a significant loss
incurred by the investor.
So why is Fidelity foregoing profits to help out the little guy investor? Trust me they’re not-the idea is steal market share from other brokerages like Vanguard and Schwab. Also, most investors don’t just invest in a single fund-while they’re perusing the F…
So why is Fidelity foregoing profits to help out the little guy investor? Trust me they’re not-the idea is steal market share from other brokerages like Vanguard and Schwab. Also, most investors don’t just invest in a single fund-while they’re perusing the F…