# Expense Ratio

*Saving & Investing — Finicade finance glossary*

The expense ratio is the annual percentage a fund deducts from assets to cover its costs, taken silently from returns rather than billed. The gap between 0.03% and 1% sounds trivial and is not: on $100,000 over 30 years at 7%, it's roughly $180,000 of final wealth. Because fees are the one variable you can predict with certainty, minimising them is the highest-confidence decision available to an investor.

**Formula:** `Annual cost = Expense ratio × Amount invested`

**Also known as:** TER, total expense ratio, fund fees, OCF

**Related terms:** [Index Fund](https://finicade.com/glossary/index-fund), [ETF (Exchange-Traded Fund)](https://finicade.com/glossary/etf), [Mutual Fund](https://finicade.com/glossary/mutual-fund), [Management Fee](https://finicade.com/glossary/management-fee), [Load (Sales Charge)](https://finicade.com/glossary/load)

Source: https://finicade.com/glossary/expense-ratio