Expense Ratio
The annual fee a fund charges, expressed as a percentage of your investment. A 0.03% expense ratio costs you $3 per year on every $10,000 invested.
By Findley's Finance · Last reviewed: September 2026
Why it matters
Expense ratios look tiny and compound brutally. The fee is skimmed off your returns every year, so a 1% fee does not cost 1% of your gains — over decades it eats a quarter or more of your ending balance versus a near-zero-cost fund holding the same assets. This is why index funds win: there is no manager genius worth a 1% annual drag.
Concrete example
$100,000 growing at 7% for 30 years becomes about $761,000. With a 1% expense ratio dragging returns to 6%, it becomes about $574,000 — the fee quietly cost roughly $187,000.