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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
The annual fee a fund charges to manage your money, expressed as a percentage of your investment.
Why It Matters
Expense ratios are the silent wealth killer. A 1% fee doesn't sound like much, but over 30 years it can cost you hundreds of thousands of dollars. If you invest $10,000 annually for 30 years at 7% returns, a 0.03% expense ratio leaves you with $944,000. A 1% expense ratio? Only $761,000. That's $183,000 lost to fees. Always check the expense ratio before buying any fund.
Key Points
- Index funds typically charge 0.03-0.20%; actively managed funds charge 0.50-1.50%
- The fee is automatically deducted from your returns - you never see a bill
- Lower expense ratios almost always lead to better long-term performance
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The annual fee a fund charges to manage your money, expressed as a percentage of your investment. Expense ratios are the silent wealth killer. A 1% fee doesn't sound like much, but over 30 years it can cost you hundreds of thousands of dollars.
Expense ratios are the silent wealth killer. A 1% fee doesn't sound like much, but over 30 years it can cost you hundreds of thousands of dollars. If you invest $10,000 annually for 30 years at 7% returns, a 0.03% expense ratio leaves you with $944,000. A 1% expense ratio? Only $761,000. That's $183,000 lost to fees. Always check the expense ratio before buying any fund.
Index funds typically charge 0.03-0.20%; actively managed funds charge 0.50-1.50%
The fee is automatically deducted from your returns - you never see a bill
Lower expense ratios almost always lead to better long-term performance