The Bogleheads' Guide to Investing

Let’s assume someone puts $ 10,000 in a mutual fund, leaves it there 20 years, and gets an average annual return of 10 percent. If the fund had an expense ratio of 1.5 percent, the fund is worth $ 49,725 at the end of 20 years. However if the fund had an expense ratio of 0.5 percent, it would be worth $ 60,858 at the end of 20 years. Just a 1 percent difference in expenses makes an 18 percent difference in returns when compounded over 20 years.