The annual fee a fund charges, as a percentage of assets, deducted automatically from returns.
It sounds tiny but compounds against you every year. A 1% expense ratio versus 0.05% can consume a quarter of your final balance over 30 years — the single most controllable cost in investing.
Example: On $100,000 growing at 7%, a 1% fee versus 0.05% fee costs roughly $170,000 over 30 years.
FAQ
What is Expense Ratio in simple terms?
It sounds tiny but compounds against you every year. A 1% expense ratio versus 0.05% can consume a quarter of your final balance over 30 years — the single most controllable cost in investing.