What are some examples of expense ratios?

What are some examples of expense ratios?

Expense ratios are fees that mutual funds and ETFs charge to manage your investments. For example, a fund with a 1% expense ratio means that 1% of your investment is used for management fees annually.

Can you give me specific examples of funds with different expense ratios?

Sure! For instance, the Vanguard Total Stock Market Index Fund has an expense ratio of about 0.04%, while the actively managed Fidelity Contrafund has an expense ratio of around 0.85%.

How do these ratios affect my investment returns?

Higher expense ratios can significantly reduce your overall returns over time. For example, a 1% higher expense ratio can lead to thousands less in your portfolio after several decades.

What is considered a good expense ratio?

Generally, an expense ratio below 0.5% is considered excellent, while anything above 1% is seen as high, especially for index funds.