Mutual Funds

Expense Ratios

Why does the expense ratio matter?

If your fund has an annual return of 5% this year, and has a 2% expense ratio, your annual return is actually only 3%. The return could have been nearer 5%, but high expenses make it lower. The same type of fund with a lower expense ratio would put more money in your pocket over time, since it spends less of your money administering the fund. This is why expenses matter.


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