Don’t forget that average retirement investor using market timing and individual stock selection, etc. is under performing the S&P 500 index by 5%-6% annually. You may as well set fire to your 401k contribution.
{{ Long-Term Annual Gap (20-30 Years):
According to Dalbar’s 2025 QAIB report, the average equity investor underperformed by approximately 2.14% annually over a 30-year period.
Other data suggests a wider chasm, with the S&P 500 returning roughly 7.1% to 10% annually over 20 years, while the average investor earned only 2.1% to 2.6%. }}
It would seem that the NASDAQ index is a fair way to invest in growth.
The Captain
••• I realize I’m putting the Pareto cart before the Pareto horse. There is something in the Universe’s statistical machinery that forces this outcome. Stuart Kauffman, my favorite Complexity Scientist, in At Home in the Universe called it “Order for Free.”
Google AI
In At Home in the Universe: The Search for the Laws of Self-Organization and Complexity (1995), Stuart Kauffman introduces “Order for Free” as a central tenet of complexity science, arguing that the spontaneous order observed in nature is not merely a product of natural selection, but an inherent, “free” property of complex systems.
Order for free is equally stated a framework that is natural (or perhaps, a framework which exists, but may not be understood from some referential points of view).
The focus of my college education and my first years of employment was mathematical analyses of complexity, and being a fervent environmentalist I became entranced with how complexity begets evolution begets new orders of being.
Do you know if there is still the issue of selling the fund and moving to another broker? There used to be a portability problem that if you sold a ZERO, but did not invest in another Fidelity fund, you absorbed the tax hit.
Look in the Statement of Additional Information to the prospectus. You’ll see a lot of ways that they can pay higher brokerage fees on transactions (if deemed in the interest of fund shareholders), and they’re allowed to self-deal with Fidelitys trading desk.
As long as the fund’s turnover ratio is low (i.e., 1% to 2%) that shouldn’t be a problem.
Yes, there is an issue as Fidelity will only allow these funds in Fidelity accounts. This could trigger a forced sale (and capital gains or losses) if you move them to another broker.
This is why all my ZERO funds are in my IRA, where any withdrawal is taxed as ordinary income (with the exception of QCDs you choose to make).
It’s entirely intercst’s fault that I pay withdrawals at ordinary income because he didn’t learn me fast enough about the benefits of a Roth. Shame on him.
Unfortunately that is the trend in the industry. More and more firms are using a low(er) cost proprietary index fund that can only be held in their own account.
I think it is actually being used as a “loss leader” to make accounts and relationships more sticky - that once you move there, it becomes more difficult to leave without potential tax consequences.
