How index funds work: why doing nothing beats most experts
Fund fees: how much does a 1% fee really take?
A fund fee of 1% a year sounds tiny. But 1% of what? In some years, that small number takes a big part of everything you earned.
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1
That evening, Miva reads her statement closely for the first time. At the bottom, in small print, it says "expense ratio: 1.00%". It is the yearly fee of Rono's fund.
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2
Miva does the sum in her head. Say her $10,000 grows by $700 in a good year. One percent of the gain is $7. "That is a fair price for an expert," she thinks.
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