What are fund fees really costing you?
A half-percent expense ratio sounds tiny — but compounded over decades it can quietly swallow six figures of your returns. Enter a balance, monthly contribution, and time horizon, then compare two expense ratios to see the ending balance under each and the total dollars the higher fee drains from your portfolio. Everything runs in your browser — nothing is uploaded.
How the fee drag is modeled
- Each scenario earns your gross return minus its expense ratio, compounded monthly, with contributions added at the end of each month.
- "Lost to fees" for each fund is its ending balance compared with an identical zero-fee portfolio; the headline figure is the gap between fund A and fund B.
- Expense ratios are charged on the whole balance every year — so the dollar cost grows as your portfolio grows, which is why small percentages compound into large sums.
- Real returns vary and aren't guaranteed; this isolates the effect of fees, holding the gross return identical for both funds.
A simplified projection for planning, not investment advice. It assumes a constant gross return and level contributions, and it ignores taxes, trading costs, load fees, and the possibility that a pricier fund earns a different gross return. Lower cost is a strong predictor of higher net returns, but not a guarantee.
Why a 0.7% fee difference matters so much
An expense ratio is the annual percentage a fund charges to run itself. It's deducted quietly from the fund's returns, so you never see a bill — which is exactly why it's easy to ignore. But the fee applies to your entire balance every single year, and the money it skims off can no longer compound. Over a 30- or 40-year horizon, the difference between a 0.05% index fund and a 0.75% active fund routinely runs into tens or hundreds of thousands of dollars.
Fees compound against you
Compounding is usually your friend, but fees flip it around. Every dollar a fund takes in fees is a dollar that never earns a return, and that lost return never earns a return either. The result is a widening gap: the two portfolios start close together and drift further apart every year. This is the same math that makes early investing powerful — running in reverse.
What counts as a "good" expense ratio?
- Broad index funds and ETFs — often 0.03% to 0.10%. Total-market and S&P 500 index funds anchor the low end.
- Target-date and specialty funds — commonly 0.10% to 0.50%.
- Actively managed funds — frequently 0.50% to 1.00% or more.
- Advisor "assets under management" fees — often around 1% per year, on top of the fund fees inside your portfolio.
How to cut what you pay
Check the expense ratio of every fund you own — it's in the fund's prospectus and on any brokerage fund page. Where a cheaper index fund tracks the same market, switching can capture most of the savings this calculator shows. In a taxable account, weigh any capital-gains tax from selling against the future fee savings; in a 401(k) or IRA you can usually switch funds with no tax cost.
Frequently asked questions
What is an expense ratio?
An expense ratio is the annual fee a mutual fund or ETF charges, expressed as a percentage of your invested assets. A 0.50% expense ratio means $5 per year for every $1,000 invested, deducted automatically from the fund's returns rather than billed to you directly.
How much do investment fees really cost over time?
Far more than the headline percentage suggests, because the fee is charged on your whole balance every year and the money it removes stops compounding. On a portfolio built over decades, the gap between a low-cost index fund and a fund charging 0.75%–1% often reaches tens or hundreds of thousands of dollars, as this calculator shows.
Is a low expense ratio always better?
For funds tracking the same market, yes — cost is one of the few reliable predictors of long-run net return, and a cheaper index fund usually wins. The nuance is that two funds may follow different strategies or asset classes; compare like with like. But paying more rarely buys better index performance.
Does this calculator include advisor fees?
You can model them. If you pay a financial advisor around 1% of assets per year, enter that as one of the expense ratios (or add it on top of the fund's own ratio) to see the combined drag. The math treats every annual percentage drawn from your balance the same way.
Where do I find a fund's expense ratio?
It's listed in the fund's prospectus and on the fund page at any brokerage or on the fund company's website, usually labeled "net expense ratio." For a 401(k), your plan's fund lineup or fee disclosure statement lists the expense ratio for each option.
Put fees in the context of your whole plan
Free, private, and running entirely in your browser. Project your investments, taxes, and retirement together — and track plan vs. actual — no account required.