Glossary term

Expense ratio

An expense ratio is the annual percentage an investment fund charges to cover operating costs.

Reviewed April 4, 2026

By Marcus Lee • Retirement & Planning Editor

Expense ratios can look small because they are quoted in percentages, but they scale with both time and balance size. A seemingly tiny fee gap can compound into a meaningful drag over decades.

Low fees do not guarantee better results, but fee discipline is one of the few long-term variables investors can control directly.

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