💸THE HIDDEN COST THAT CAN EAT INTO YOUR ETF RETURN
When comparing ETFs, most investors look at performance, dividends, and holdings.
But there’s another number you shouldn’t ignore: the expense ratio.
Let’s say you invest $100,000 in two ETFs:
* ETF A charges 0.03% annually.
* ETF B charges 0.75% annually.
That’s a difference of $720 per year on a $100K portfolio, before considering how fees compound over time.
And if you’re holding that ETF for 10, 20, or 30 years, those costs matter.
Here’s what I look at before buying an ETF:
1. Expense ratio: How much am I paying annually?
2. Total return: Has it actually performed well?
3. Holdings: What companies am I getting exposure to?
4. Strategy: Is it passive, actively managed, or using options?
5. Distribution quality: Is the income sustainable?
A high-fee ETF isn’t automatically bad, and a low-fee ETF isn’t automatically good.
The goal is to make sure the value you’re receiving justifies what you’re paying.
Question: Would you pay a higher expense ratio for an ETF with a strategy you genuinely believe in, or do you prefer keeping fees as low as possible?
Educational content only. Not financial advice.
