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