Mutual funds and exchange-traded funds, or ETFs, are valuable parts of a long-term investment stock portfolio.<br />Managed by professionals, they allow you to buy into companies and securities that you may not have been able to on your own.<br />But while both mutual funds and ETFs are considered low-cost investment products, they do cost money.<br />So before you sign up for any of them, the most important thing to look at is the expense ratio--an umbrella term that covers all sorts of costs and fees.<br />It's usually a percentage of the annual net assets in the fund and is deducted directly from the fund's gross assets.<br />Even a small difference in a fund's expense ratios can result in significantly more fees paid or saved over time.<br />For example, take $20,000 invested for twenty years at a 5% rate of annual, compounded growth.<br />A fund with an expense ratio of 0.25% would return $50,595 at the end of twenty years. But a fund with an expense ratio of 1% would return just $43,822!
