How to price an expense ratio
Turn a percentage fee into a dollar amount.
1
Enter the balance
Use the current value of the fund holding.
2
Add the expense ratio
Find it in the fund fact sheet, usually shown as an annual percentage.
3
Compare long-term balances
The difference between the gross and net results is the cost of the fee.
What does this tool do?
An expense ratio is charged as a percentage of assets, so the dollar cost rises as the balance grows. Small differences compound into large gaps over decades.
The Formula
Annual fee = Balance × Expense ratio; net balance grows at (Gross return − Expense ratio)Frequently Asked Questions
Why does a small fee matter so much?
It reduces the balance every year, and the lost growth compounds. A one percent fee can take a large bite over thirty years.
Are expense ratios the only fund cost?
No. Trading costs, sales loads and advisory fees may be separate. Check the fund documents for the full cost.