What ETFs really cost
The TER and the costs beyond it — and how small fees compound over decades.
An ETF's headline cost is its ongoing charge, the TER — a small yearly percentage. But the real cost also includes the trading spread and how closely the fund tracks its index. Small percentages sound tiny, yet over decades they can quietly add up.
What fund fees really cost you over 30 years
A fee of 1% sounds tiny. Drag the slider and watch what it quietly takes over a lifetime of investing.
More in Costs & fees
Read them in any order — each one takes a few minutes.
The all-in cost of an ETF (it’s more than the TER)
The headline yearly fee is only part of the story. Here are the other small costs baked into owning an ETF.
Read → · 2 minWhat it costs to buy and sell an ETF
Separate from the fund’s own fee, there are small costs on your side each time you trade. Here they are.
Read → · 2 minTracking difference: how closely an ETF follows its index
An index fund aims to copy an index, but never perfectly. Tracking difference is the small gap. Here is what causes it and how to read it.
Read → · 2 minWhat it actually costs to hold an ETF — TER, all-in cost and tracking difference together
Three numbers, one real question: TER, all-in cost and tracking difference each capture a different slice of what an ETF costs you. Read together, not separately, they’re the closest thing to a true answer.
Read → · 3 minCommon questions
What is the TER?
The total expense ratio: the fund's yearly running cost, shown as a percentage of what you have invested.
Do small fees really matter?
Over 20 to 30 years, a difference of a fraction of a percent each year can add up to a meaningful amount, because it compounds.
Is the TER the only cost?
No — there is also the trading spread and any tracking difference. Together they make up the total cost of owning the fund.
Key terms on this page
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Finance Hamster provides educational information about ETFs and investing. It is not investment, tax, or legal advice, and not a recommendation to buy or sell any security. Markets carry risk; do your own research or consult a licensed adviser.