#expense ratio

An expense ratio is the annual fee a fund charges as a percentage of your money, and because it compounds against you every year, a seemingly tiny 1% can quietly cost you six figures over a lifetime.

ETFs trade intraday, tend to cost less, and are structurally more tax-efficient than mutual funds. For most people building a long-term portfolio, a low-cost index ETF is the sensible default. Here is why.