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7 Investments for the FatFIRE Movement

Two years ago, I wrote about buying on the dip as an investment strategy for those in the FIRE movement. FIRE stands for Financial Independence, Retire Early, and involves a commitment to both cutting your daily expenses and an accelerated investment strategy. Today, FatFIRE is the “in” retirement concept. 

FatFIRE takes things a step further. Devotees to this new movement want to be able to “retire with a fat stash” that allows them to live on around $100,000 a year. According to Fortune, FatFIRE split off from FIRE in 2016 when a Reddit user decided cutting his expenses to the bone wasn’t his idea of a good time. 

And so the subreddit r/fatFIRE was born. Today, it has more than 330,000 members. The downside of FatFIRE is that it’s incredibly unrealistic. Very few people have the skillset to pull it off. Financial planner Dana Menard puts it at around a tenth of the population. 

If you believe you’re in this cohort, though, here are seven investments to help you with your FatFIRE dreams.

FDIS Fidelity MSCI Consumer Discretionary Index ETF $61.96
VHT Vanguard Health Care ETF  $225.60
XNTK SPDR NYSE Technology ETF $96.48
JXI iShares Global Utilities ETF $59.49
LVMUY LVMH $117.17
BRK-B Berkshire Hathaway $266.45
DE Deere & Co. $331.67

Fidelity MSCI Consumer Discretionary Index ETF (FDIS)

a person standing in a shopping mall with a bag in their hand. May CPI data.

Source: Shutterstock

The Novel Investor has a 15-year chart that shows the annual performance of all 11 sectors in the S&P 500. The first thing I noticed is that the index’s consumer discretionary stocks were in the top three sectors based on annual returns on eight occasions. That’s the best showing of all 11 sectors.

So, if you don’t want to lose your shirt betting on consumer trends — Peloton Interactive (NASDAQ:PTON) and Wayfair (NYSE:W) come to mind — take the safer route and bet on the entire sector.

I selected Fidelity MSCI Consumer Discretionary Index ETF (NYSEARCA:FDIS) because it has a low expense ratio of 0.08%, 2 basis points less than Vanguard and State Street’s versions. 

FDIS tracks the performance of the MSCI USA IMI Consumer Discretionary Index, a collection of companies that reflects the consumer discretionary sector in the U.S. The cap-weighted ETF has 330 holdings. The top 10 account for 63% of the $1.1 billion in total assets.

I’d own all 10. However, note that Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) account for almost 40% of the ETF’s assets. I like both companies, but if you don’t, you may want to pass on putting this ETF in your FatFIRE portfolio.

Vanguard Health Care ETF (VHT)

Medicine and healthcare concept - team or group of doctors and nurses

Source: Supavadee butradee / Shutterstock.com

After consumer discretionary, healthcare was the sector with the most years out of the past 15 as a top performer, according to Novel Investor. With the U.S. population getting older and life expectancy increasing, demand for healthcare will continue to rise. The need for healthcare is never going away. It’s that simple.

Vanguard Health Care ETF (NYSEARCA:VHT) tracks the performance of the MSCI U.S. Investable Market Health Care 25/50 Index, a collection of large and small healthcare stocks. The 25/50 means that a single stock can’t account for more than 25% of the index, and those companies with a weighting exceeding 5%, added together, can’t account for more than a 50% weighting.

The ETF has 405 stocks and $15.8 billion in total assets. It leans heavily on pharmaceuticals, which account for 26.6% of the portfolio, biotechnology (17.6%) and health care equipment (17.5%). The top 10 holding account for 47% of the ETF.  

As for the top three holdings, you’ve got UnitedHealth Group (NYSE:UNH) at 8.9%, Johnson & Johnson (NYSE:JNJ) at 7.8%, and Pfizer (NYSE:PFE) at 4.6%. Is it a coincidence that two of those names developed Covid-19 vaccines? I don’t think so. 

Over the past 10 years, VHT has had an average annualized total return of 14.3%.


Image of a man holding multiple devices and a graphic that connects all of them

Source: Shutterstock

The SPDR NYSE Technology ETF (NYSEARCA:XNTK) from State Street tracks the performance of the NYSE Technology Index, an equal-weighted index composed of 35 of the leading U.S.-listed technology-related companies. 

I’m a big fan of equal-weighted ETFs because they don’t rely too much on one or two stocks like FDIS above does. A few bad years by both Tesla and Amazon and your hard-earned capital is dead money.

The weighted average market cap of the companies held by the ETF is $392 billion, so it’s very large-cap in nature. The top three industries are semiconductors (24%), internet and direct marketing retail (9.8%) and systems software (9.5%). 

In business since September 2000, XNTK has total net assets of $365.4 million, so it’s not a massive fund. IBM (NYSE:IBM) is the top holding at 4.9%, followed by Tesla and…

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