GLOSSARY TERM
Expense Ratio (TER/OCF)
Expense ratio shows the yearly cost of owning a fund or ETF. It is usually shown as a percentage of your investment.
What does this mean in practice?
This cost is taken inside the fund, so you usually do not see it as a separate bill. Instead, it quietly reduces your return over time. TER and OCF are common ways of showing these ongoing fund costs. For a beginner, the main idea is simple: the higher the expense ratio, the more of your money is used for costs each year.
Example
If a fund has an expense ratio of 0.20%, you pay about €2 per year for every €1,000 invested. If another fund costs 1.00%, that would be about €10 per year for every €1,000.
Why it matters
Costs may look small, but over many years they can make a big difference. Lower costs leave more of your money invested and compounding for you.
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