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Not investment advice. Educational reading. See Disclaimer.
L.2 · BEGINNER · 2 MIN

Expense Ratios: The Silent Return Killer

The expense ratio is the annual fee deducted from fund assets. It seems tiny, but compounding magnifies the difference over decades.

Quiz · 5 questions ↓
§ 01
Fee Impact = Investment x ((1 + r)^n - (1 + r - fee)^n)
§ 02
Compare expense ratios of SPY (0.09%), VOO (0.03%), and IVV (0.03%). All three track the same index.
§ 03

A 0.75% fee does not sound like much, but it can cost you hundreds of thousands over a career. Always check the expense ratio before buying an ETF.

§ 04
ETF A: 0.03% expense ratio. ETF B: 0.25%. Both track the S&P 500. Over 30 years on $100K, what's the difference in final wealth assuming 8% gross?
Five questions · AI feedback

Sit with the ideas.

You invest $50,000 in an ETF with a 0.50% expense ratio. Roughly how much do you pay in fees per year?

Why:
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Build a 3-ETF starter portfolio

Allocate $25,000 of your paper cash across three ETFs: a broad-market index (e.g., VTI or SPY), an international fund (e.g., VXUS), and a bond fund (e.g., BND or AGG). Pick the weights you'd actually hold for the next decade.

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