What is Expense Ratio?

Background

The expense ratio is the annual fee a mutual fund charges to manage your money. It is expressed as a percentage of assets and is deducted daily from the NAV.

Explanation

Higher expense ratios mean a larger slice of returns goes to the fund house instead of you. Over 20–30 years, even a 1% difference per year compounds into a very large rupee gap, which directly affects your retirement corpus.

Example

Two funds both earn 12% gross. One charges 2% expenses (net 10%), the other 1% (net 11%). Over 25 years of ₹10,000 monthly SIPs, the 11% fund can leave you with several lakhs more purely because of lower costs.

Try the planner

See how this concept fits your own retirement plan.

Retirement Planner | All Retireopedia terms