Look beyond the headline
Compare both the investment and the account holding it. A fund’s expense ratio is only one possible charge. There may also be transaction, advisory, or account fees. Ask for a full fee schedule. Investor.gov: How fees affect your portfolio
A simple comparison
Suppose two hypothetical portfolios each start at $10,000 with no additional contributions and earn a constant 6% per year before fees. For illustration, subtract an annual fee of 0.2% or 1% from that return. After 20 years, the balances are approximately $30,883 and $26,533. These figures are rounded and exclude taxes and inflation; actual returns fluctuate and may be negative.
Use the comparison carefully
Lower cost does not make two investments equivalent. Consider risk, diversification, service, and whether the investment fits the goal. This example isolates one variable so you can see the effect of costs, not choose a product.
Your next step
Read the fee table for an investment you are researching. Write down its recurring costs and any one-time charges. Compare similar options using the same assumptions.
$10,000 starting balance · 6% annual return before fees · no contributions
Balance = $10,000 × (1 + 6% − annual fee)²⁰. Simplified annual calculation; excludes taxes and inflation. Hypothetical returns, not a forecast.