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How do I actually read and compare expense ratios between two similar funds?

Answer

An expense ratio is the yearly percentage a fund charges to run itself, deducted automatically from your returns. A 0.03% ratio costs $3 per year on $10,000; a 0.75% ratio costs $75 for essentially the same market exposure. When comparing two similar index funds, the lower ratio almost always wins because both are trying to track the same benchmark, so fees are one of the few things you can control. Morningstar and each fund's prospectus list the ratio, and it's shown on most broker fund pages. Watch for funds that look cheap but tack on sales loads or 12b-1 marketing fees. WealthSerene's model portfolios at wealthserene.com/tools/model-portfolios favor low-cost index funds so you're not handing away returns to fees.

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