Expense ratios
Understand why expense ratio = total annual fund costs ÷ assets.
In this lesson
Expense ratios is part of Funds and ETFs. This preview shows how investment-universe connects to everyday family decisions such as earning, saving, spending choices, goals, approvals, or parent-guided money conversations inside Progress Penguin.
Think about this money choice
Imagine this situation: Fund A: 15% return, 0.2% expense ratio. Fund B: 15% return, 2.0% expense ratio.
How it works
Expense ratio = total annual fund costs ÷ assets. It is deducted daily from the fund's NAV (net asset value) — you never see a direct charge but your returns are reduced by this amount annually. A 2% expense ratio means the fund must outperform a 0.2% fund by 1.8% just to deliver the same net return to you.
Apply it to a real decision
Real-life money moment: Fund A: 15% return, 0.2% expense ratio. Fund B: 15% return, 2.0% expense ratio. On 1000000 in local currency over 20 years, approximate difference in ending wealth? The key lesson is: The expense ratio compounds against you.
Activity preview
Choose the best money move
Use what you just learned. Choose the option you can explain.
Try one real money action
Open Tasks and submit proof for one task, or open Requests and make a deposit request. Parent approval can happen later.
Quiz preview
An 'expense ratio' is:
Fund A: 15% return, 0.2% expense ratio. Fund B: 15% return, 2.0% expense ratio. On 1000000 in local currency over 20 years, approximate difference in ending wealth?