Vanguard S&P 500 fund costs significantly less than average stock funds

Vanguard's S&P 500 index fund charges investors just $3 a year on a $10,000 investment. The typical stock fund charges around $40 for the same amount. That is more than thirteen times the cost.

The fee, called an expense ratio, covers a fund's running costs. Vanguard's ratio is 0.03%, which is very low. Active stock funds cost more because they pay analysts to research companies and trade shares frequently. Index funds simply follow a market index, so they need less work.

The S&P 500 has nearly doubled in value over the past five years, making it a popular choice for investors. Lower fees mean investors keep more of their returns, and that difference grows larger over time.