Expenses arise at multiple levels and are rarely fully visible in one place. Brokers charge commissions on trades, custodians charge for record-keeping, and fund managers charge management fees. A separate and often overlooked item is the spread between buy and sell prices: it's not itemized as a charge but is deducted from results immediately.
The significance of costs is determined not by absolute amount but by their share of returns and frequency of operations. A fractional percent commission is negligible with one purchase per year but becomes substantial with regular trading. For conservative instruments with low returns, the relative weight of expenses is higher than for risky assets.
Over long horizons, the effect compounds: annual fees of a couple percent can consume a notable portion of final capital over decades, as they reduce not just current income but also the base for future growth.
A practical approach is to calculate returns after all expenses and compare instruments on this basis. Unlike returns, costs are known in advance and controllable, so they deserve primary attention.