Savings and Investments

Mutual Funds

Why does and expense ratio matter?

It matters because if your fund has an annual return of 5% this year, and it has a 2% expense ratio, your annual return could have been 7%, but because of high expenses, it is actually lower. The same type of fund with a lower expense ratio would in effect put more money in your pocket over time, since it spends less of your money administering the funds. This is why expenses matter.


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