What Is An Expense Ratio & How It Affects Your Investments

When it comes to anything in life, you don’t want to pay more for anything if you don’t have to. Not wanting to pay for anything you don’t have to is also true with investing. 

What Is An Expense Ratio?

An expense ratio can most easily be defined as: the cost for a fund to operate vs. its assets’ total value.

Why Are Expense Ratios Important?

When you invest in a fund with a higher expense ratio, the returns you earn are lowered by that much more.

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How Do I Know A Funds Expense Ratio?

Funds are required to make them known to investors, so we’re not talking about hidden fees here.

Can You Avoid Expense Ratios?

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Any fund you invest in will have operating expenses, so no, if you are a mutual fund investor, you can’t avoid them.

Which Investment Strategy Should I Use?

Your investment strategy comes down to how active or passive you want to get with your investments.

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