Index funds are one of the easiest, yet best overall ways for nearly anyone to invest in a stock market and build wealth over time. In fact, one of the best investors of all time, Warren Buffett, said by periodically investing in an index fund being no-nothing investors can
actually outperform most investment professionals. And with Fidelity being one of my favorite brokerages that I've been using for many years, I made plenty of content on their platform and strongly believed that the four investments I'm about to show you create one of the best overall portfolios to own for life. Now, if you didn't know, index funds are pretty much a way to invest
in two hundreds to even thousands of different companies all within one purchase, and the benefit of the year is that index funds are passively managed, which means they're typically super cheap to own. They're also really easy to buy, they allow for a great diversification within a portfolio, and with the right ones that I'll cover throughout this video, they have proven historically to do
數百甚至數千家不同公司，只需一次購買即可。而其優點是，指數基金是被動式管理
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very well over time for investors. I'll also cover an example of this portfolio later in the video, as well as a future simulation of a thousand different samples that shows this portfolio could potentially outperform the S&P 500 over the next 20 years. But knowing that, my name's Danny Sully,
and all I ask before we get started is if you do find value in this content that you consider hitting the like and subscribe button with notifications on for future content like this.
And so the first index fund that I view as the foundation to nearly any investment portfolio is the Fidelity Total Market Index Fund with the Tigger FS CACS.
因此，我認為幾乎所有投資組合的基礎，第一個指數基金是富達全市場指數基金，代號為FS CACS。
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Now the first thing you have to understand about all the index funds I'm about to show you in this video is that they are all a type of mutual fund. I made an entire video covering index funds versus mutual funds and ETFs, as well as the differences in their tax efficiency that I highly recommend watching after this video if you are confused. But as far as the Fidelity Total Market
現在，關於我將在這影片中展示的所有指數基金，你首先需要了解的是，
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Index Fund, by purchasing this fund, you are able to gain exposure to nearly all publicly traded US-based companies where in the click of a button, you can own 3,866 different holdings that range from large, mid to small cap size companies diversified across value, blend,
and growth-style characteristics. Which you can also see of the holdings, the largest sector exposure is technology being close to 30%, then financial service, health care, and consumer cyclical thereafter. And something else important to know about this fund is that it is market cap
weighted, which means the companies that are inside of the fund are given weight based on their size. For instance, because Apple, Microsoft, and NVIDIA are among the largest companies in the United States and even the world, you can see that they each have a significant amount of weight toward the fund. And if you look at the top 10 companies, you probably heard most of them,
加權的，這意味著基金內的成分公司是根據其規模來分配權重。例如，由於蘋果、微軟
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if not all, and if you combine these together, these 10 alone make up nearly 30% of the entire fund. But even if that sounds risky, the biggest benefit of all with index funds is that as markets rotate over time, the investments in the fund also rotate, which reduces the risk on your investment
while still offering strong growth over time. And so even with all this change and uncertainty, the index, commonly used as the standard stock market benchmark, that is the S&P 500, shows that the average annualized return from 1928 to November 2024 was just over 10%.
Now if you didn't know, the S&P 500 contains strictly 500 of the largest US-based companies, so it's not the same as FS CAGS, the total market index fund, where there is small, mid, and large cap size companies. But if we compare the S&P 500 to a total stock market index fund,
there's currently around an 88% overlap between the two, and the main difference is that you are able to gain more exposure to small and mid-sized US companies. Also, realize the impact of averaging 10% per year over time can lead to significant gains, where let's say that you invest $7,000
which is roughly $583 per month, averaging 10% for 30 years, that means you would have over a million dollar portfolio. And if that were in a Roth IRA, by the time you retire, everything in that account could be completely tax-free. Not to mention, but we've recently had a strong market
where over the past 10 years FS CAGS has averaged over at 11.61% annual return. And not just is that strong growth, but an index fund like this is among the cheapest one that you can invest into, where it has an expense ratio of 0.015%, which means every $10,000 that you invest,
you're going to be paying $1.50 per year in fees. It's literally nothing. And if you didn't know, that expense is automatically taking out of your investment over time as you own it, it's not something you're going to have to pay separately. But knowing that about the Fidelity Total Market Index Fund and index funds as a whole, let's now move on to discuss the
next index fund that is the Fidelity Large Cap Growth Index Fund with the ticker FSPGX.
下一個指數基金，也就是富達大型成長指數基金，股票代碼為FSPGX。
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Now this fund is designed to track the Russell 1000 Growth Index, which is a market cap weighted index designed to measure the performance of the large cap growth segment of the US equity market, where you can also see starting March 24th, 2025, that no more than 22.5% of the weight
may be allocated to a single company and the sum of all companies that are above 4.5% weight combined cannot be more than 45% of the entire index. All of these indexes that I'm showing you have strict guidelines on what can be included or not inside of the fund. But for this large cap
growth fund, you can see that Apple, Microsoft, and Nvidia are also the largest holdings just like the Total Stock Market Index Fund. But here they have even more weight to each of them being roughly 12, 10, and 9%. And not just that, but the top 10 holdings alone make up roughly 57% of
the entire fund, and that makes a total of 399 holdings. You can also see that the main sectors in the fund are technology at 48%, then consumer cyclical close to 15% and communication services at 13%. And because tech stocks have done so well recently, over the past five years,
this fund has averaged a 17.2% annual return, and since it was publicly created in 2016, it has averaged a 16.78% annual return. All while costing you a .035% expense ratio, which means every $10,000 that you invest, you're going to be paying $3.50 per year in fees.
Now the returns may seem great, but no one knows what the future holds, and realize that there are less holdings and more risk in this kind of investment than a Total Stock Market Index Fund, so you'll definitely want to think about your personal situation and how you want to allocate your funds accordingly. But also know that since 1972, the large cap growth index
has computed relatively the same results as the Total Stock Market Index. And one of the most impactful quotes that I love referring to here is one of the legendary investor Ray Dalio said, diversifying well is the most important thing you need to do in order to invest well.
Not just do index funds provide great diversification, but the four that I'm showing in this video have all done very well over time, and have each performed very well in different times of the market, which is why they're among my overall favorites. With that said, let's now move on to the number three index fund that is the Fidelity Small Cap Index Fund with the ticker FSSNX.
Now this fund is designed to track the Russell 2000 Index, which means it seeks to provide investment results that correspond to the total return of stocks of small cap US companies. Many of these holdings are ones you probably haven't heard of where the top 10 make up roughly 4% of
the entire fund, which the fund has 1,965 holdings. And the main sectors that make up this fund include financial services at 18%, then health care, industrials, and technology thereafter.
And even though one of the main benefits of small cap stock exposure is that the companies are known to have more potential for growth over the past 10 years, this fund is actually underperformed by quite a bit where it has averaged a 6.47% annual return.
Now it does have a 0.025% expense ratio, which is really cheap, and that means every $10,000 you invest, you're paying $2.50 per year. But one key statistic that I like to view here is that since 1972, the small cap index has actually outperformed both the large cap growth and US stock market
indexes. Now I'm not saying it's a better choice, but to consider learning more about small cap exposure because a portion there may very well be worth it depending on what you're looking for.
And another interesting point about small cap stocks is that the returns from the bottom of bear markets since 1926 have shown that their post returns on average tend to be superior to large cap stocks. And then another study by Paul Merriman shows that a portfolio of 25% small cap
blend, 25% small cap value, 25% S&P 500, and 25% large cap value, this doesn't just improve the diversification of the portfolio, but would have actually outperformed the S&P 500 over the past 50 years and by quite a bit. In fact, with an initial $100,000 invested,
after 50 years, that growth would have either turned into either $15 million with large cap exposure or $32.5 million with the four fund portfolio. Of course, no one knows what the future holds, but I do believe gaining additional exposure here would only improve the diversification
of a portfolio while still offering the potential for strong growth over time, which the way I customize this portfolio in the example later in the video allows for small cap stock exposure to be very similar to the amount toward mid cap stocks. But before we cover that, the last index fund that is my smallest position of the four is the Fidelity Total International
Index Fund with the ticker FTIHX. Now, this fund aims to track the MSCI All Country World Index, excluding the USA investible market where it seeks to provide the investment results that correspond to the total return of foreign developed and emerging markets. The fund has 5,070 holdings
with the top ones being Taiwan semiconductors and many more thereafter with very low weight to the fund. You can also see the top sectors include financial services at 22%, then industrials, technology, and consumer cyclical thereafter, where the top countries consist of Japan at 15%,
then the UK, China, Canada, and many more thereafter. Which if we look at the past five-year performance, this fund has averaged a 10.27% annual return and since it was publicly created in 2016, it has averaged 6.68% per year all while having a 0.06% expense ratio. Gaining the exposure here
may very well be worth it, but I personally recommend keeping the amount low when compared to US stocks. One of the main reasons is that many of the top US stocks also generate significant revenue in other countries like Nike, where only 43% of its entire revenue comes from North America.
Now, there are many more examples similar to that, but even though US stocks have provided stronger returns over time, there have been times where international markets have outperformed, and if you are looking to gain exposure outside of the United States to potentially reduce volatility, a small position to international may be something to consider. Of course, none of
this is financial advice you must do your own research, but let's now finish up the video with a quick portfolio example using these four index funds. For this analysis, I'm going to be using the platform stock Rover, which if you want to check it out, you can get a 14-day free trial, and I'll have a direct link in the description below for you. But the first thing you need to
know is that this is just a generic portfolio example that consists of 55% toward the total stock market index fund FS CACS, 25% large cap growth FSPGX, 15% small cap with FSSNX, and 5% toward the total international index fund that is FTIHX. And so with all these investments
combined, you can see the largest sector exposure is technology at 31%, then financial services, consumer cyclical, and healthcare that are all very close to the benchmark comparison that is the S&P 500. You can also see the difference of 5% toward international stock when compared to
the S&P 500, and looking even further into the specs, the majority of this four-fidelity index fund portfolio has the largest weight to large cap stocks, and then mid and small are roughly the same. Now, as I mentioned, the future projections that we're going to use are going to be projected
over the next 20 years using a Monte Carlo simulation of 1000 samples, including inflation, and assuming we invest $1,000 every month into this portfolio, it computes an estimated average end value of $663,000, where the mean of all 1000 samples shows higher results for this
portfolio's expected annual return, as well as the 50th percentile being slightly higher as well.
包括預期年化報酬率，以及第 50 百分位數也略高。
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But be aware that this portfolio is expected to be slightly more volatile than the S&P 500.
但請注意，此投資組合的波動性預計會比標準普爾 500 指數略高。
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Knowing that, if you want to check out other relevant videos I created or free learning guides, such as my index fund cheat sheet, or how to build an investment portfolio, I'll have them linked in the description of this video. And while I mention it, don't forget that if you want to try stock Rover out, that I'll have that link in the description below as well. On top of that,
if you want to start investing on a new platform, or check out other top financial products, I'll have direct links in the description below for you, which depending on the ones you get started with, I may earn a commission for it, which is greatly appreciated. And if you want to see exactly how I allocate each of my investments and other exclusive content, to consider checking
out my Patreon. With that said, I hope you found value in this content, and as always, don't forget that the like, subscribe, and notifications button for future content like this.
