An expense ratio of 0.14% is generally considered very good and cost-efficient, particularly for passive index funds and ETFs. It falls right around or slightly above the average for many index ETFs (around 0.10%-0.14%), making it a competitive choice for long-term investing, as it keeps costs low and maximizes returns.
A good expense ratio, from an investor's viewpoint, is around 0.5% to 0.75% for an actively managed portfolio. An expense ratio greater than 1.5% is considered high.
While the lowest-cost ETFs tend to have expense ratios less than 0.10%, the highest cost ETFs have expense ratios exceeding 10%.
Generally considered cost-efficient if the expense ratio is below 0.2%, with some options as low as 0.03%. Actively managed funds. Acceptable expense ratios are typically under 1%, though they tend to be higher due to active stock selection and management costs.
On average, expense ratios for ETFs and index funds are around 0.1%, though they can range from 0.05% to 0.15% depending on the fund's provider, strategy, and asset class. ✅ Lower-cost funds: Broad market index ETFs or funds that track major benchmarks like the S&P 500 often fall near the lower end of the range.
Buyers of mutual funds and ETFs need to know what they're paying for the funds. A fund with a high expense ratio could cost you 10 times — maybe more — what you might otherwise pay. Typically, any expense ratio higher than 1 percent is high and should be avoided.
Premium vs NAV: If the ETF is trading consistently above its Net Asset Value (NAV), it might be overpriced. Check whether the market price significantly exceeds NAV, especially if that premium is growing. Intraday Indicative Value (IIV): Compare the IIV or the real-time estimate of the ETF's value to its trading price.
For a typical 401(k) plan, the expense ratio should be no higher than 2% and more likely in the 1.0% to 1.5% range. The lower the expense ratio the better, with higher fees eating into profits.
"In my view, for most people, the best thing to do is to own the S&P 500 index fund," Buffett told attendees at Berkshire's annual meeting in 2021. He has suggested the Vanguard S&P 500 ETF (VOO 0.08%). Here's how that advice could turn $400 invested monthly into $835,000 over 30 years.
The 4% rule is a retirement guideline where you withdraw 4% of your initial savings in the first year, then adjust that dollar amount for inflation annually, aiming for your money to last 30 years; for ETFs, it means using funds like broad market (SPY) or dividend-focused (SCHD) ETFs to build a diversified portfolio that generates this income, but it's a starting point, not a guarantee, with newer strategies suggesting lower rates or incorporating high-dividend ETFs (like JEPI) for better cash flow, especially for FIRE (Financial Independence, Retire Early) investors needing longer horizons.
The expense ratio is an important factor that can impact your mutual fund returns. A higher expense ratio means that a larger portion of your returns will be deducted as fees, thereby reducing your overall returns. On the other hand, a lower expense ratio can help you maximise your returns.
Investopedia suggests 0.5% to 0.75% is a reasonable expense ratio for an actively managed fund. An expense ratio of more than 1.5% is on the higher side. You'll also find the expense ratio for mutual funds is typically higher than that of ETFs since they're passively managed.
A good expense ratio is generally low, often under 0.2% for index ETFs/mutual funds and under 1% (ideally 0.5-0.75%) for actively managed funds, but the ideal depends on the fund type, as passive index funds have much lower costs than active funds. Aim for the lowest possible fees, especially for broad market index funds, as high fees significantly reduce long-term returns, with ratios over 1% often considered high and warranting scrutiny.
Roughly 7% to 9% of American households have $500,000 or more in retirement savings, though figures vary slightly by source, with data from late 2025 suggesting around 7.2% and older 2022 data indicating about 9%, showing it's a significant milestone achieved by less than one in ten families, despite higher averages driven by wealthy individuals.
The $1,000 a month rule is a retirement guideline suggesting you need about $240,000 saved for every $1,000 per month in desired income, based on a 5% annual withdrawal rate (5% of $240k is $12k/year, or $1k/month). It's a simple way to set savings goals, but it doesn't account for inflation, taxes, or other income like Social Security, so it's best used as a starting point, not a complete plan.
A 2019 study by Harvard Business Review found either Vanguard, BlackRock or State Street is the largest listed owner of 88% of S&P 500 companies. There is a perception that a few select companies own a vast majority of the stock market.