Expense Ratio (Fees): Definition & Example

Expense Ratio (Fees)

The yearly percentage a fund charges to manage your money.

An expense ratio is the fee a fund takes each year, quietly, off the top. It sounds tiny but compounds against you: a 1% fee can cost you a fifth of your final balance over decades. Favor low-cost index funds, and use our fee-impact calculator to see the real dollar cost.

For example

A 1% fee on a portfolio you build over 30 years can quietly cost six figures, versus almost nothing for a 0.03% index fund.

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Expense Ratio (Fees)

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