Expense Ratio

The expense ratio is the annual fee an ETF or mutual fund charges, expressed as a percentage of assets. A 0.10% expense ratio means $10 per year on every $10,000 invested. Fees are deducted silently from fund returns, so they compound against you. Over 30 years, a 1% fee difference can reduce your final portfolio value by 20%+. Popular dividend ETFs like SCHD charge just 0.06%; actively-managed mutual funds can charge over 1%.