How to Get Your First Free Index Funds

This is one race to the bottom that we may be falling behind: Fidelity announced that it will offer two free index funds, surpassing Vanguard and Schwab as the first fund company to do so.

Fidelity Zero Total Market Index Fund and Fidelity Zero International come with 0.00% commission regardless of how much money is invested in either fund and will be available on Friday. This gives investors free access to the American and international markets.

According to CNBC , stock companies and discount brokers are engaging in an “endless war of commissions,” which is good news for the average investor. Vanguard announced in July that it would no longer charge ETF trading fees from this month. But Fidelity’s final move could give her an edge.

CNBC notes that as investors become more aware of the commissions they pay (and reduce the likelihood of investing in expensive products):

Many index fund and ETF experts have argued that it will ultimately make sense for fund managers to offer “building blocks” – major market risks – for free and charge for less generic investment products as individuals and advisors fill their portfolios.

Fidelity will also cut fees on other “major” mutual funds by about 35 percent and will remove investment minimums for some funds. The fund company says fees will be lower than those of Schwab and Vanguard.

As we wrote earlier, fees are one of the main things to look out for when choosing an investment because they can eat up your profits. And investing in low-cost ETFs and index funds is the best way for the average investor (you and me) to accumulate wealth over time. So Fidelity’s announcement is certainly good news – let’s see if other funds follow suit.


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