Expense ratios are the most boring number in investing and one of the most important. A fund's expense ratio is the annual fee it charges as a percentage of your investment, deducted automatically from returns. The difference between a fund charging 0.03 percent and one charging 1 percent sounds trivial, but over a lifetime of investing it can amount to tens of thousands of dollars.

This guide explains what expense ratios cover, why they vary so much, and how to use them as a simple filter when choosing funds, without needing any financial expertise.