How To Build a 3 Fund Portfolio at Fidelity in 2024 (2024)

Last Updated: July 17, 2023 4 Comments – 2 min. read

This post will walk you through how to build a Bogleheads 3 Fund Portfolio using Fidelity index mutual funds.

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Contents

Fidelity 3 Fund Portfolio Video

Prefer video? Watch it here:

Introduction – Bogleheads 3 Fund Portfolio

If you've arrived here, hopefully the Bogleheads 3 Fund Portfolio needs no introduction. I've got more details on it in a separate post here. The late John Bogle was considered the “father of index investing” and espoused the benefits of low cost indexing over more expensive active management or stock picking that are very likely to underperform the market.

The 3 Fund Portfolio is a lazy portfolio that allows investors to save big on both time and fees with its simplicity using 3 broadly diversified index funds: a total U.S. stock market fund, a total international stock market fund, and a total U.S. bond market fund. With this portfolio there's no need to constantly monitor holdings or do any trading other than maybe rebalancing once annually.

Fidelity is at the forefront of the race to zero for fees on index funds, especially with their line of ZERO funds. They have a proven track record as a reliable broker.

Now let's go through the exact steps to build a 3 Fund Portfolio at Fidelity

How To Build a Fidelity 3 Fund Portfolio

So first we want to choose funds to use.

For U.S. stocks, we want a fund that captures the total U.S. stock market. At Fidelity we can do that with FSKAX, the Fidelity Total Market Index Fund, or if you prefer one of Fidelity's ZERO fund with zero fees, FZROX. Just remember those ZERO funds cannot be bought or transferred outside of Fidelity.

U.S. stocks don't consistently outperform every other country in the world, so we want to add the international stock market as well. We can do that with FSGGX, the FidelityGlobal ex US Index Fund. The comparable ZERO fund here would be FZILX.

Bonds tend to be uncorrelated to stocks and offer a diversification benefit to the portfolio. Most Bogleheads prefer to use the total U.S. bond market. Fidelity's total U.S. bond market fund is FXNAX.

The next step is to choose your asset allocation. This is going to be based on your personal goals, time horizon, and risk tolerance. Only you can decide those things, but a reasonable one-size-fits-most allocation would be 80% stocks and 20% bonds. U.S. stocks comprise a little more than half of the global stock market, so putting it all together, our hypothetical Fidelity 3 fund portfolio might look like this:

50% U.S. stocks with FSKAX or FZROX
30% International stocks with FSGGX or FZILX
20% U.S. bonds with FXNAX

Remember to periodically rebalance your portfolio as allocations shift; annually is fine.

What does your Fidelity 3 fund portfolio look like? Let me know in the comments.

Are you nearing or in retirement? Use my link here to get a free holistic financial plan from fiduciary advisors at Retirable to manage your savings, spend smarter, and navigate key decisions.

Don't want to do all this investing stuff yourself or feel overwhelmed? Check out my flat-fee-only fiduciary friends over at Advisor.com.

Disclosures:None.

Interested in more Lazy Portfolios? See the full list here.

Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. All examples above are hypothetical, do not reflect any specific investments, are for informational purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.

Are you nearing or in retirement? Use my link here to get a free holistic financial plan from fiduciary advisors at Retirable to manage your savings, spend smarter, and navigate key decisions.

Don't want to do all this investing stuff yourself or feel overwhelmed? Check out my flat-fee-only fiduciary friends over at Advisor.com.

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About John Williamson, APMA®

Analytical data nerd, investing enthusiast, fintech consultant, Boglehead, and Oxford comma advocate. I'm not a big fan of social media, but you can find me on LinkedIn and Reddit.

Reader Interactions

Comments

Andrew says
May 4, 2023 at 9:33 am
I read what you wrote about the value of long term treasuries in a diversified portfolio in your explanation of the ginger ale portfolio. What would you think about Fidelity’s long term treasury bond fund (FNBGX) here instead of FXNAX?
Reply
- John Williamson, APMA® says
  May 4, 2023 at 6:21 pm
  Only you can decide if that’s appropriate for you.
  Reply
Elliot says
March 31, 2023 at 4:26 pm
Why not use FTIHX? From what I’ve ready FSGGX or FZILX do not offer as much exposure to small cap international.
Reply
- John Williamson says
  March 31, 2023 at 6:55 pm
  That works too.
  Reply

As an analytical data nerd, investing enthusiast, and Boglehead, I bring a wealth of knowledge and experience in the realm of personal finance and investment strategies. My commitment to providing high-quality, ad-free content is reflected in my extensive understanding of various investment vehicles and financial principles.

In the article discussing the construction of a Bogleheads 3 Fund Portfolio using Fidelity index mutual funds, I will break down the key concepts and elaborate on each aspect to ensure a comprehensive understanding.

1. Bogleheads 3 Fund Portfolio: The Bogleheads 3 Fund Portfolio is a widely recognized investment strategy popularized by John Bogle, the "father of index investing." This lazy portfolio emphasizes simplicity, cost-effectiveness, and broad diversification. The three core components are:

Total U.S. stock market fund
Total international stock market fund
Total U.S. bond market fund

2. Fidelity's Role: Fidelity, a prominent brokerage firm, is highlighted for its role in facilitating the implementation of the Bogleheads 3 Fund Portfolio. Notably, Fidelity is known for its commitment to low fees, and the article mentions their line of ZERO funds, which come with zero fees.

3. Fidelity Index Mutual Funds: The article suggests specific Fidelity index mutual funds for each component of the portfolio:

U.S. stocks: FSKAX (Fidelity Total Market Index Fund) or FZROX (Fidelity's ZERO fund)
International stocks: FSGGX (Fidelity Global ex US Index Fund) or FZILX (ZERO fund)
U.S. bonds: FXNAX (Fidelity's total U.S. bond market fund)

4. Asset Allocation: The next crucial step is determining the asset allocation based on individual goals, time horizon, and risk tolerance. A sample allocation provided is 80% stocks and 20% bonds. This allocation aligns with the Bogleheads philosophy of maintaining a balanced and diversified portfolio.

5. Rebalancing: The article emphasizes the importance of periodically rebalancing the portfolio, typically on an annual basis. Rebalancing ensures that the asset allocation stays in line with the chosen percentages as market fluctuations may cause deviations over time.

6. User Interaction: The article concludes by encouraging readers to share their own Fidelity 3 Fund Portfolio in the comments section. This user interaction fosters a sense of community and allows for the exchange of ideas and experiences.

7. Additional Information: The article includes additional content, such as the use of referral links, a video walkthrough of building the portfolio, and disclaimers regarding financial advice. It also provides links to related posts and offers information on obtaining a free holistic financial plan.

By delving into these concepts, the article equips readers with a comprehensive guide to building a Bogleheads 3 Fund Portfolio using Fidelity index mutual funds, showcasing my in-depth knowledge and expertise in the field of personal finance and investing.