What Is an Expense Ratio? More Getty Images Understanding how this important calculation works can help investors determine which types of funds tend to have low expense ratios. Investing in stocks can get you closer to your long-term financial goals. These assets gain value as the corporations ...
The total expense ratio (TER) is a convenient way of forming an initial judgement on whether an investment fund is worth its management fees. As a rule of thumb, the TER should be between 1% and 1.25%. Funds with safer investment profiles should be on the lower side and vice versa. ...
An expense ratio measures how much you’ll pay over the course of a year to own a fund, and a high expense ratio can significantly impact your returns.
What Is an Expense Ratio? An expense ratio is the fee that you pay to an investment fund each year. An expense ratio reduces your returns so the lower the fee, the better. Funds charge expense ratios to pay for portfolio management, administrative costs, marketing, and more. What Is a G...
Both ETFs and mutual funds have an "expense ratio," which is essentially the cost of being invested. For example, if you have an ETF with a 0.18% expense ratio on a $1,000 investment, you're paying $1.80 in fees a year. Because of an ETF's structure, their administrative costs tend...
Unlikely actively-managed mutual funds, index funds try to match the performance of an index such as the S&P 500. There are licensing costs associated with this tracking which the expense ratios cover. Expense Ratio Calculation The expense ratio is calculated as: Total fund expenses / total asset...
Why is it important to maintain a good debt-to-income ratio? There are a few reasons why it's important to maintain a good DTI ratio, including: You never know when you will need a loan: You never know when a surprise expense will pop up - and when one does, you may need a lo...
Lenders, including anyone who might give you a mortgage or an auto loan, use DTI as a measure of creditworthiness. DTI is one factor that can help lenders decide whether you can repay the money you have borrowed or take on more debt. A good debt-to-income ratio is below 43%, and ...
The times interest earned ratio is an indicator of a corporation’s ability to meet the interest payments on its debt. The times interest earned ratio is calculated as follows: the corporation’s income before interest expense and income tax expense divided by its interest expense. The larger th...
Current ratio Quick ratio or acid test ratio The amount of a company’s working capital is also cited as an indicator of liquidity. However, a company with a large amount of inventory that is difficult to sell may have a large amount of working capital and a favorable current ratio, but ...