Submitted by autoHQ t3_z8ezmx in personalfinance
maedocc t1_iybrumd wrote
Reply to comment by autoHQ in Roth IRA through Chase Bank? by autoHQ
Here is the JPMorgan Equity Index Fund, which is designed to track the S&P 500.
Go down the page a bit, and you'll see (under the "Fees" subheading): "Gross expenses" and "Net expenses".
The net expenses are key... this fund's net expense ratio is 0.45%. What does that mean?:
>Expense ratios are typically represented as a percentage. An expense ratio of 0.2%, for example, means that for every $1,000 you invest in a fund, you’ll be paying $2 annually in operating expenses. These funds are taken out of your expenses over time, so you won’t be able to avoid paying them. Just as your returns are magnified because of compound interest, your expenses are as well, which is why there may be a big difference in earnings if you choose to invest in a fund with a high expense ratio.
By contrast, Vanguard's S&P 500 index fund has an expense ratio of: 0.03%.
That is what people mean when they talk about index funds with low expenses. Fidelity even has some funds without any fees at all.
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