What Should I Invest In?

Disclaimer: I am not a financial advisor, and this is not financial advice. I am an actuary. ASA not yet achieved; all requirements are met and the designation is expected in June or July depending on application timing. This is simply what I invest in, and you should draw your own conclusions.

I use Fidelity as my brokerage. Not a controversial choice. What is kind of wild is that the answer to "what should I invest in?" is basically three funds and a nap. John Bogle called it "the majesty of simplicity." He was right. The majesty mostly consists of doing nothing for thirty years while American capitalism does the heavy lifting.

The Bogleheads three-fund portfolio is the consensus answer for people who have better things to do than watch CNBC. Buy one fund that holds the entire U.S. stock market, one that holds the rest of the world, and one that holds U.S. bonds. Set an allocation. Rebalance once a year. Go live your life. It beats the vast majority of actively managed portfolios over any reasonable horizon, and it does so while charging you roughly nothing. This is one of the better deals civilization has ever produced, and most people ignore it because it isn't exciting.

The Three Funds — What and Why

Each leg of the portfolio has a job.

US Total Stock Market

At Fidelity: FSKAX (or FZROX, more on that in a moment). At Vanguard: VTI or VTSAX.

This is the core. You own a slice of every publicly traded company in the United States — Apple and the local bank, Nvidia and the regional grocery chain. It's weighted by market cap, so the biggest companies take the biggest slots, but you hold roughly 3,700 stocks. The whole market. Your investment thesis for this leg: American companies, in aggregate, will keep making money. Two hundred years of evidence says yes. Pretty great country to index.

A quick note for S&P 500 investors: If you are reading this and already hold SPY (or VOO, or FXAIX) and are worried because I'm talking about "Total Market" funds—don't be. SPY is fantastic. It captures the largest 500 companies in the US and correlates extremely closely with the total stock market. If you are already invested in SPY, you should not sell it just to switch. Hold onto it.

International Total Stock Market

At Fidelity: FTIHX (or FZILX). At Vanguard: VXUS or VTIAX.

The rest of the world. Europe, Japan, emerging markets, everything that isn't the US. I believe in American exceptionalism and I still hold international — because the humility to hedge your best bet is itself a form of exceptionalism. International will underperform US stocks in some decades and outperform in others. That's the point.

US Total Bond Market

At Fidelity: FXNAX. At Vanguard: BND or VBTLX.

The ballast. Bonds won't make you rich, but they'll keep you from panic-selling at 2 a.m. US investment-grade bonds across all maturities — Treasuries, corporates, mortgage-backed. They dampen volatility and give you dry powder to rebalance into when stocks drop. Their entire job is to be boring. Let them.

Fidelity's ZERO Funds — The Free Lunch That Mostly Is

In 2018 Fidelity did something slightly insane: launched mutual funds with literally zero expense ratios. FZROX (Total Market) and FZILX (International) charge you nothing. Zero basis points. The fund company makes money on securities lending and the hope that you stick around. Your fee is genuinely $0.00. A free index fund. We live in the future.

There is a catch, and it's worth understanding. The ZERO funds are proprietary to Fidelity. They track Fidelity's own indexes, not the standard ones, and they cannot be transferred in-kind to another brokerage. If you ever want to leave Fidelity, you'd have to sell the ZERO funds first, which in a taxable account means realizing gains and paying taxes.

In practice, this matters less than it sounds. If you hold ZERO funds in an IRA or HSA — tax-advantaged accounts where selling triggers no taxable event — the portability issue is irrelevant. Sell, transfer the cash, rebuy equivalent funds at the new brokerage. No harm done. In a taxable brokerage account, though, you're better off with FSKAX and FTIHX (which charge 0.015% and 0.06% respectively — essentially rounding errors) or the Vanguard ETFs, which are industry-standard and transfer anywhere.

One gap: there's no ZERO bond fund. FXNAX at 0.03% is the play at Fidelity, and honestly, at three basis points, you're arguing about the cost of a single coffee per year on a $10,000 bond position. It's fine.

Allocation — The Part Everyone Overthinks

This is where people lock up. They buy the three-fund premise, then the percentages paralyze them. Stocks vs. bonds? US vs. international? They read seventeen Reddit threads, build a spreadsheet, and end up doing nothing because they can't nail the optimal split.

There is no optimal split. The specific percentages matter far less than having percentages at all. The perfect is the enemy of the invested.

Some reference points. Vanguard's Target Retirement funds use roughly 60/40 stocks-to-bonds, with about 40% of the stock allocation in international. The traditional rule of thumb is "your age in bonds" — if you're 30, hold 30% bonds and 70% stocks. Many younger investors, especially those with long time horizons and stable incomes, go more aggressive: 80/20 or even 90/10 stocks-to-bonds. For the international split, Vanguard recommends 20–40% of your stock allocation; global market-cap weighting would put it closer to 50/50.

Pick something reasonable. Write it down. That's your investment policy. You now have a plan, which puts you ahead of the vast majority of people who have a vague intention and a brokerage app they check too often.

The Actual Virtue

And this is where the title earns its double meaning.

Having a plan you can state in one sentence — "I invest in three index funds and rebalance once a year" — is the real advantage of this approach. Not because it's mathematically optimal in every market condition. It's not. There are scenarios where a different allocation, a factor tilt, a tactical shift would have done better in hindsight. There are always scenarios like that. The financial media generates them daily.

The advantage is that you'll actually stick to it.

The plan you follow beats the plan you abandon. The portfolio you hold through a crash beats the portfolio you sold at the bottom with the intention of buying back in "when things settle down" — which, in practice, means buying back in after the recovery, having locked in your losses. The simple allocation you rebalance mechanically once a year beats the sophisticated strategy you second-guess every time the market moves 3% in a week.

Fidelity — the virtue, not the brokerage — is the thing that actually compounds. Sticking to a boring plan, year after year, through noise and panic and FOMO, is the hardest and most valuable thing an individual investor can do.

This is where fidelity the virtue meets Fidelity the brokerage. The brokerage hands you the tools — low-cost funds, zero-expense options, a perfectly fine app. The virtue is what you bring to it: contribute regularly, rebalance annually, close the app when headlines get loud. One takes ten minutes. The other takes thirty years of practiced indifference to noise. Guess which one actually pays.

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None of this is original thinking. I'm just summarizing a consensus that the Bogleheads community has refined over decades, with a personal note about how I implement it at Fidelity. If you want the full picture — the tax-loss harvesting strategies, the bond tent debates, the international allocation arguments — the wiki has all of it. Start there.

For me, the portfolio fits in one sentence, the sentence fits in my head, and my head fits on a pillow at night. The simplicity isn't a compromise. It's the whole strategy.