Investment Fee Calculator
What an expense ratio or advisory fee costs over the years: the balance with and without the fee, the fees paid, and the balance lost to fees including the growth they would have earned. Compare two fee levels.
Result…
How it's calculated
Each month: balance × (1 + R)^(1/12), then the fee takes 1 − (1 − F)^(1/12) of it, then any contribution is added Over a year without contributions: balance × (1 + R) × (1 − F) Balance lost to fees = balance with no fees − balance with the fee Lost growth = balance lost to fees − total fees paid
A yearly fee of one or two per cent looks small, but it is taken from the whole balance every year, and every amount taken also stops growing. Over decades the gap between a balance with and without fees can be far larger than the fees you actually paid. This page grows a starting balance and regular contributions at the return you enter, takes the fee each month, and shows the balance with and without the fee, the fees paid, and the growth lost on them. Compare two fee levels, such as an actively managed fund against an index fund, or an advisory fee on top of fund costs. Enter the total of all percentage fees you pay; fixed charges are not included.
Your numbers, step by step
About the Investment Fee calculator
This investment fee calculator shows what a yearly fee does to a portfolio over time. Fund expense ratios, advisory fees and platform charges are usually a small percentage of your balance, but they are taken every year from the whole amount, and the money taken out stops growing. Enter a starting balance, monthly or yearly contributions, the return you assume before fees, the fee and the number of years, and the calculator shows the balance with and without the fee, the fees you actually pay, and the total balance lost, including the growth those fees would have earned. Turn on the comparison to set two fee levels side by side, such as a managed fund against a low-cost index fund. The fee is charged monthly as a share of the balance, and each step is shown. For growth without fees, try the compound interest calculator.
How to use it
- Enter the “Starting balance” and a “Contribution”, then choose whether contributions are “Monthly” or “Yearly”.
- Set the “Return before fees (a year)” you want to assume.
- Enter the “Yearly fee”, adding together every percentage fee you pay, and the number of “Years”.
- Turn on “Compare a second fee” and enter the “Second yearly fee” to see the difference between the two.
Worked example
A balance of 20,000 with 300 added each month for 25 years, at 6% a year before fees, grows to 288,724.10 with no fees. With a 1% yearly fee it reaches 240,993.86, so 47,730.24 is lost to fees: 27,369.78 in fees paid plus 20,360.46 of growth those fees would have earned. That is 16.53% of the no-fee balance. At a 0.2% fee the balance is 278,396.08, which is 37,402.22 more than at 1%.
Updated
Questions people ask
How much does a 1% fee cost over 25 years?
It depends on your balance, contributions and return. In the example above, a 1% fee costs 47,730.24 of a 288,724.10 balance, about one sixth, because the fees and the growth they would have earned both disappear.
What is the formula for fee drag?
Without contributions, each year the balance grows by the return and then loses the fee: balance × (1 + return) × (1 − fee). The balance lost to fees is the no-fee balance minus the balance with the fee.
Why is the balance lost bigger than the fees I paid?
Every amount taken as a fee would otherwise have kept compounding until the end. The lost growth on those fees is added to the fees themselves, and over decades it can be as large as the fees.
What is a common mistake when comparing fund fees?
Looking only at the fund's expense ratio and forgetting platform, advisory or account fees charged on top. Add every percentage fee together and enter the total.
Does this show my real future balance?
No. Real returns vary from year to year, and taxes, inflation, fixed charges and tiered fees are left out. Fee structures differ by provider and country, so read the fund documents, and talk to a licensed financial adviser before you decide.