Best Index Funds for FIRE

The FIRE movement runs on index funds. They're low-cost, diversified, and have historically returned 7-10% annually. Here's exactly what to buy.

The Three-Fund FIRE Portfolio

Fund Ticker Expense Ratio Allocation Purpose
Vanguard Total Stock Market VTI 0.03% 60-70% US equity growth
Vanguard Total International VXUS 0.07% 20-30% Global diversification
Vanguard Total Bond Market BND 0.03% 10-20% Stability and rebalancing

Total portfolio cost: Under 0.05% annually. Over 25 years, a 0.05% ER portfolio costs ~$19,000. A 1% active fund costs ~$340,000. The difference is your FIRE number.

Fidelity and Schwab Equivalents

Vanguard Fidelity Schwab
VTI FSKAX (0.015%) SWTSX (0.03%)
VXUS FTIHX (0.06%) SWISX (0.06%)
BND FXNAX (0.025%) SWAGX (0.04%)

Recommended Allocation by Age

Age Stocks Bonds Rationale
20-30 100% 0% Maximum growth, decades to recover
30-40 90% 10% Still growth-focused, small buffer
40-50 80% 20% Sequence risk approaching
50+ 70% 30% Preservation + growth balance
In retirement 60-75% 25-40% Income + inflation protection

Why FIRE Investors Love VTI

  • 3,700+ US stocks in one fund
  • 0.03% expense ratio ($3/year per $10,000)
  • ~10% historical annual return (since 1992)
  • Dividends ~1.5% — reinvest for compounding
  • Tax-efficient — low turnover, mostly qualified dividends

International Allocation Debate

Some FIRE purists (JL Collins) say VTI is enough — US companies already have global exposure. Others (Bogleheads) recommend 20-40% international. The data:

  • VXUS has underperformed VTI for the last 15 years
  • Historically, US and international take turns leading
  • 20% international is a reasonable hedge without dragging returns

Choosing between account types is just as important — compare options in our Roth vs Traditional for FIRE guide.

The FIRE Accumulator's Checklist

  1. Open brokerage + Roth IRA at Vanguard, Fidelity, or Schwab
  2. Buy VTI (or equivalent) — set and forget
  3. Add bonds (BND) when 10-15 years from FIRE
  4. Reinvest all dividends automatically
  5. Never panic-sell during market drops — keep buying

Compound Interest Calculator Investment Fee Impact

Ready to begin your journey? Our how to start FIRE guide covers everything from your first dollar to your first day of retirement.

Sources