Expense Ratio
Expense ratio is the yearly percentage fee a fund charges to operate and manage the fund.
Why this matters
Even small fee differences can compound into large gaps in long-term portfolio value.
Simple example
A 0.10% expense ratio means about $1 per year for every $1,000 invested.
Common mistakes
- Comparing funds without comparing fees.
- Assuming high fees guarantee better performance.
- Ignoring total cost when funds look similar.