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Lesson reading notes

Fees & expense ratios

Small annual fund fees can quietly compound against you.

The annual price tag

An expense ratio is a fund's yearly operating cost, expressed as a percentage of your investment. A 0.10% expense ratio is about $1 per year for every $1,000 invested.

Costs come out of returns

You usually do not receive a separate bill. The fund's expenses are taken from its assets, which means less of the return stays with investors.

Small differences add up

A fee that looks tiny can matter over decades because the money spent on fees also loses its chance to grow. Compare similar funds, not unrelated strategies.

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