Achieving FIRE (Financial Independence, Retire Early) has become a transformative goal for many millennials, Gen Z professionals, and even older investors looking to exit the traditional workforce early. One of the most accessible and consistent tools in this journey is mutual funds. Whether you reside in the United States or Canada, here’s a deep dive into the best strategies using mutual funds to accelerate your path to FIRE.
Contents
- 1 🌟 Why Mutual Funds for FIRE(Financial Independence, Retire Early)?
- 2 🇺🇸 FIRE Strategy in the U.S. Using Mutual Funds
- 3 🇨🇦 FIRE Strategy in Canada Using Mutual Funds
- 4 🔹 General FIRE Mutual Fund Tips for Both Countries
- 5 🔍 Tools to Use
- 6 🌐 External Mutual Fund Screeners
- 7 ✨ Key Mutual Funds for FIRE (as of August 2025)
- 8 🇺🇸 U.S. Mutual Funds
- 9 🇨🇦 Canadian Funds / ETF
- 10 📊 Side-by-Side at a Glance
- 11 🔍 Key Takeaways & Perspective
- 12 📌 Related Articles from Bloonser
- 13 🔹 Final Thoughts
🌟 Why Mutual Funds for FIRE(Financial Independence, Retire Early)?
Mutual funds offer several advantages for FIRE:
- Diversification across stocks, bonds, or other securities
- Professional management
- Automatic reinvestment of dividends and capital gains
- Access to tax-advantaged accounts (IRA, RRSP, TFSA, etc.)
- Dollar-cost averaging for consistent, low-stress investing
🇺🇸 FIRE Strategy in the U.S. Using Mutual Funds
1. Max Out Tax-Advantaged Accounts
- 401(k): Invest in low-cost index mutual funds like those tracking the S&P 500 (e.g., Vanguard 500 Index Fund – VFIAX)
- Roth IRA: For tax-free growth; ideal mutual funds include total market or growth-oriented funds
- HSA (Health Savings Account): If eligible, invest for triple tax benefit
2. Focus on Low-Expense Index Funds
- Avoid high-fee actively managed mutual funds unless they consistently outperform benchmarks.
- Top Picks: Vanguard Total Stock Market Index Fund (VTSAX), Fidelity ZERO Total Market Index Fund (FZROX)
3. Use Target-Date Mutual Funds Wisely
- Consider if you prefer a set-it-and-forget-it strategy.
- Choose a fund with a target retirement date earlier than traditional retirement (e.g., Target 2035 instead of 2050).
4. Supplement With Taxable Accounts
- Use tax-efficient mutual funds and ETFs in a brokerage account once tax-advantaged accounts are maxed.
🇨🇦 FIRE Strategy in Canada Using Mutual Funds
1. Leverage TFSA & RRSP
- TFSA (Tax-Free Savings Account): Great for long-term compound growth.
- RRSP (Registered Retirement Savings Plan): Defer taxes until retirement.
2. Use All-In-One or Balanced Mutual Funds
- e.g., Vanguard Growth ETF Portfolio (VGRO), iShares Balanced Growth CorePortfolio Fund
- Provide equity/bond diversification with automatic rebalancing
3. Index Funds with Low MER (Management Expense Ratio)
- RBC Index Funds, TD e-Series Funds (if sticking with mutual funds instead of ETFs)
4. Non-Registered Accounts for Overflow
- When TFSA and RRSP limits are maxed, invest in tax-efficient funds outside registered accounts
🔹 General FIRE Mutual Fund Tips for Both Countries
- Reinvest dividends for compounding
- Review fund fees annually
- Avoid market timing
- Automate monthly investments
- Track FIRE number: Know your annual expenses and multiply by 25
🔍 Tools to Use
- Bloonser FIRE Calculator (Coming soon)
- Morningstar for fund analysis
- Canoe.ca for Canadian market news
🌐 External Mutual Fund Screeners
✨ Key Mutual Funds for FIRE (as of August 2025)
U.S.
- VTSAX (Vanguard Total Stock Market Index Fund)
- VFIAX (S&P 500 Index)
- FZROX (Fidelity ZERO Total Market)
Canada
- TD Canadian Index Fund – e Series
- RBC Balanced Fund
- Vanguard Balanced ETF Portfolio (VBAL) (Note: ETF structure, but similar to mutual funds)
🇺🇸 U.S. Mutual Funds
VTSAX — Vanguard Total Stock Market Index Fund
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5-Year Annualized Return: ~14.5% / year; 3-Year: ~15.4%; YTD (2025): ~6.3% Yahoo Finance+13Yahoo Finance+13Total Real Returns+13
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Since Inception (Nov 2000): Average ~8.6%/year; total return ~+314% from $10k → $41k by Aug 2025 StockAnalysisTotal Real Returns
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Best/Worst Calendar Years (2000–2025): +31.5% (2023), −37% (2008) Total Real Returns
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Drawdown: Max −56% in the 2008 financial crisis Fidelity Investments+3Total Real Returns+3schwab.com+3
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Expense Ratio: Very low (~0.04%) Yahoo Finance+15Investopedia+15Investopedia+15
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Top Holdings: Apple, Microsoft, Nvidia, Amazon, Meta (~30% combined) StockAnalysis+2StockAnalysis+2
VFIAX — Vanguard 500 Index Fund (S&P 500)
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1-Year Return (Aug 2025): ~18.2%
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3-Year Annualized: ~16.2%; 5-Year Annualized: ~15.3% dividend.com+6dividend.com+6Total Real Returns+6
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Expense Ratio: Extremely low (0.04%) Investopediainvestor.vanguard.com
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Performance Rank: Among top quartiles vs peers (e.g. 22% tier for 1‑year returns) dividend.com
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Top Holdings: Overweight tech giants—Apple ~7%, Microsoft ~5.9%, Nvidia ~5.6% etc. dividend.com
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Drawdown Behavior: Roughly similar to VTSAX over market cycles.
FZROX — Fidelity ZERO Total Market Index
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Inception Date: Aug 2018
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YTD (2025): ~6.3%; 1-Year Return: ~19.3%
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3-Year Annualized: ~19.4%; 5-Year: ~15.9% (though fund only ~7 years old) kiplinger.com+13Total Real Returns+13mutualfunds.com+13StockAnalysis+3StockAnalysis+3dividend.com+3dividend.com+1
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Drawdown: Max ~−35% in March 2020 market crash
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Expense Ratio: 0% (zero-fee structure)
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Risk Metrics: Sharpe ratio competitive; low turnover (~2%) Fidelity Investments+2Vanguard Advisors+2MarketWatch+1
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Top Holdings: Similar large caps as VTSAX (Apple, Microsoft, Nvidia) Total Real Returns
🇨🇦 Canadian Funds / ETF
TD Canadian Index Fund – e‑Series
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Annual Returns (2025): ~+10.7% YTD; 2024: ~+21.0%; 2023: +10.8%; 2021: +24.9% ycharts.com
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Comparison vs TSX 60: Slightly higher or on par with benchmark (~10–20% vs index ~10–21%) ycharts.com
RBC Balanced Fund (Select Balanced Portfolio, Series F / A)
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10-Year Annualized Return: ~6.5% (Series F) / ~6.9% (Series A)
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1-Year Return (2025): ~12.6%
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3-Year Return: ~10.1% Yahoo Financeca.finance.yahoo.com
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Peer Performance: Outperformed category by 7.8% over 5 years and 14.1% over 10 years kiplinger.com
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Structure: Multi-asset (Equity, Fixed Income) actively managed
VBAL – Vanguard Balanced ETF Portfolio (Canada)
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YTD Return (2025): ~4.3%; 1-Year Return: ~13.3%; 3-Year Annualized: ~12.0%; 5-Year: ~7.9% Investopedia
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Dividend Yield: ~2.3% with ~16% annual dividend growth over past few years digrin.com
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Assets Under Management: ~CAD 3.6 billion
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Expense Ratio: Very low for a balanced portfolio (~0.2–0.25%) Yahoo Financevanguard.ca
📊 Side-by-Side at a Glance
| Fund / ETF | Country | YTD 2025 | 1‑Yr Return | 3‑Yr Ann | 5‑Yr Ann | Notes |
|---|---|---|---|---|---|---|
| VTSAX | U.S. | 6.3% | ~17–19% | ~15.4% | ~14.5% | Broad U.S. equity, low fee |
| VFIAX (S&P 500) | U.S. | ~6.8% | ~18.2% | ~16.2% | ~15.3% | Large‑cap focus |
| FZROX | U.S. | ~6.3% | ~19.3% | ~19.4% | ~15.9% | Zero–fee U.S. total market |
| TD Canadian Index Fund e‑Series | Canada | ~10.7% | ~21.0% | — | — | Tracks TSX index closely |
| RBC Balanced Fund | Canada | ~4.8–5% | ~12.6% | ~10.1% | ~6.5% | Equity + bond diversity |
| VBAL ETF | Canada | ~4.3% | ~13.3% | ~12.0% | ~7.9% | Passive balanced portfolio |
🔍 Key Takeaways & Perspective
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Historical U.S. index mutual funds (VTSAX, VFIAX) consistently deliver mid-teens returns over rolling multi-year periods, with strong resilience over market cycles MarketWatch+10Investopedia+10Investopedia+10StockAnalysisinvestor.vanguard.com+12Investopedia+12Investopedia+12MarketWatch+2Investopedia+2.
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FZROX, despite being newer, has delivered returns on par or higher than VTSAX due to its zero‑cost structure, though it’s still young and lacks long-term data beyond ~7 years Fidelity Investments+8Total Real Returns+8StockAnalysis+8.
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Canadian-indexed and balanced funds like TD Index and VBAL offer solid returns with lower volatility, and VBAL’s dividend yield makes it a good choice for conservative compounding strategies.
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Balanced funds outperform peers—RBC Balanced Fund has shown strong relative performance vs its category and delivers diversified exposure with less downside risk.
📌 Related Articles from Bloonser
🔹 Final Thoughts
Mutual funds offer an efficient, hands-off way to build long-term wealth and achieve FIRE — whether you’re in Toronto or Texas. With consistent investing, low-cost diversified holdings, and tax planning, mutual funds remain a strong pillar for anyone aiming to retire early.
Need a personalized FIRE plan using mutual funds? Stay tuned for the Bloonser FIRE Toolkit!
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