All topics · Step 4: Invest every month

Fees.

A 1% fee sounds tiny. Over decades it can take a big slice of your money. See how much.

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Fee calculator

$
Many world index funds charge between 0.05% and 0.25%.
The pricier fee costs you

Low-cost fund
Pricier fund
Of your money lost

Both funds earn 7% a year before fees, as an example. Fees are taken every year, so the gap grows over time.

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Remember

Three things to know.

Find the yearly fee

Look for the expense ratio, the yearly fee as a %, on the fund's page.

Compare like with like

Two funds that own the same companies can charge very different fees.

Cheaper is usually better

Fees are one of the few things you control. Every bit you save stays invested for you.

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Questions

Good questions.

What is an expense ratio?
The yearly fee a fund charges, as a % of what you hold. 0.1% means $1 a year for every $1,000 invested.
Are there other fees?
Sometimes: account fees, trading fees, adviser fees. Add them all up when you compare.
Is a 1% adviser fee worth it?
It can be if you get real planning help. For simple investing in one index fund, many people don't need it.
Does a higher fee mean a better fund?
No. Research has found that lower-cost funds have tended to do better for investors over time.