What an expense ratio costs over 30 years

An expense ratio is the percentage of your balance a fund deducts each year to cover its costs. It is taken quietly from the fund’s returns, so you never see a bill.

Because it is charged on the entire balance, the dollar cost grows as your balance grows. And every dollar removed also loses all the growth it would have earned afterwards.

Over 30 years, the gap between a 0.85% fund and a 0.05% index fund with the same underlying returns can be a fifth of your final balance.