Investing
Index Funds 101 — Own the Whole Market
One fund. The entire US market. No stock picking required.
The Speedrun Take
90% of actively managed funds underperform their benchmark index over 15 years. Index funds just buy everything and charge almost nothing for it. The math is on your side.
What Is an Index Fund
An index tracks a market — the S&P 500, the total US market, the total world market. An index fund buys every stock in that index proportionally. When Apple makes up 7% of the US market, your fund holds 7% Apple.
When the market goes up, you go up. When it falls, you fall — but so does everything else, including the active fund manager who charged you 0.66% per year to underperform it.
S&P 500 Index
500 largest US companies by market cap
Total US Market
Every publicly traded US company (~4,000 stocks)
Total World Market
US + international, ~8,000+ companies
Active vs Passive — The Math
The fee difference looks small. Over decades, it's enormous.
| Active Fund | Index Fund | |
|---|---|---|
| Average expense ratio | ~0.66% per year | ~0.05% per year |
| Annual fee on $100,000 | $660 | $50 |
| 30-year fee cost (8% growth) | ~$96,000 in lost returns | ~$13,000 |
| Beat index over 15 years | ~10% of active funds | 100% (it is the index) |
The bottom line
Switching from an active fund (~0.66% ER) to FZROX (0.00% ER) on $100,000 invested over 30 years at 8% growth saves you approximately $83,000 in fees alone.
See It in Action
Adjust the sliders to see how compound growth builds wealth over time. Even small monthly contributions turn into life-changing amounts at index fund returns.
Investment Growth Calculator
Final Value
$618,102
At Different Return Rates
| Rate | Final Value | Growth |
|---|---|---|
| 5% | $420,597 | $239,597 |
| 7% | $618,102 | $437,102 |
| 10% | $1,150,081 | $969,081 |
The $500/month Rule
$500/month for 30 years at 7% → $609,985 total. You only contributed $180,000 of that. Compounding did the rest ($429,985).
The Funds Worth Buying
These are the only funds you need to consider. Everything else is either redundant or more expensive.
| Ticker | ER |
|---|---|
| FZROX | 0.00% |
| FSKAX | 0.015% |
| VTI | 0.03% |
| FZILX | 0.00% |
| VXUS | 0.07% |
| FXAIX | 0.015% |
The Simple Portfolio
Two funds cover the entire world. Pick the option that matches your brokerage.
Option A — Fidelity Users
The entire world market at 0.00% expense ratio. Best possible cost.
Option B — Any Brokerage
Works at Schwab, Robinhood, or anywhere. Very low cost at 0.03–0.07% ER.
Build Option A today
Open a Fidelity account and buy FZROX + FZILX — the entire world market at 0.00% expense ratio.
Objections Answered
What if the market crashes?
It always has. In every case in history, the market has recovered and gone on to new highs. The S&P 500 has never failed to recover over a 15-year period. Time in market beats timing the market.
Should I pick individual stocks too?
A small "satellite" allocation in individual stocks is fine if you enjoy it — but keep the index as your core. Most people who outperform the market over a given year underperform over 10+ years.
When do I sell?
When you need the money in retirement. Not before. Selling during a crash locks in losses. Selling because you're nervous is how people destroy decades of compounding.
Open Your Account
Open Fidelity — Buy FZROX for Free
No account minimum, no fees, and FZROX has the lowest expense ratio of any fund anywhere: 0.00%. Open an account in 10 minutes and start your first index fund position.