Main Costs Of Index Funds

Believe it or not but index funds have some costs which people forget or don’t know about or forget about when they are buying index funds.

In this article we will talk about 4 main costs because if we would talk about every single cost which is liked to index funds we would be here for at least 2 hours. And I’m sure that you don’t have the time for that.

Investment minimum.

This first one is the minimum which is required to invest in a mutual fund. The mutual fund cab run very high as to a few thousand dollars.

And when you have crossed that, then the most most index funds allow you as an investor to add money in smaller increments.

Expense ratio. 

This second cost is all about the subtracted payment from each fund a shareholder’s returns as a percentage of their overall investment.

And to find the expense ratio is the mutual fund’s prospectus or simply when you a quote of a mutual fund on a financial site.

Account minimum. 

This third one, is sort of different than the investment minimum but they are kind of similar when you look at it from a beginner perspective. 

When thou a brokerage’s account may be minimum at $0,  this price doesn’t remove the investment minimum for a particular index fund.

Tax-cost ratio. 

This last one is an extra fee which is sort of owning the index fund which may trigger capital gains taxes. 

If they are held outside tax-advantaged accounts. Like IRA or 401(k). 

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