Index Fund Investing for FIRE: A Simple Starting Point

An index fund is a fund that holds a broad basket of stocks (or bonds) designed to track a market index — such as the S&P 500 — rather than trying to beat it by picking individual winners. This gives you instant diversification across hundreds or thousands of companies.

Index funds are popular in the FIRE community for two main reasons: low fees (often 0.03%–0.10% per year, versus 1%+ for many actively managed funds) and historical evidence that most actively managed funds fail to beat their benchmark index over long time periods, after fees.

A common simple approach is a two- or three-fund portfolio: a total stock market index fund, an international stock index fund, and sometimes a bond index fund, with the stock/bond mix adjusted based on your risk tolerance and time horizon.

This isn't personalized investment advice — your ideal asset allocation depends on your own risk tolerance, timeline, and full financial picture. The "Expected Real Return" slider in the calculator above lets you model different long-term return assumptions to see how they affect your FIRE timeline.