How this calculator works
The calculator projects the same starting balance and monthly contributions twice: once at the assumed gross return and once at gross return minus the annual fee. The difference is the estimated long-term fee impact.
Why small fees compound
Fees reduce the balance available to earn future returns. Their long-run effect therefore includes both direct charges and growth that the removed money could have earned.
Real-world example
On a multi-decade portfolio, a one-percentage-point annual fee can reduce the ending value by far more than the sum of visible annual charges. The effect grows with time, balance, and return.
Common mistakes
- Comparing expense ratios without advisory or platform fees.
- Treating assumed returns as guaranteed.
- Ignoring taxes and trading costs.
- Choosing an investment solely because it is cheapest.
When to use this calculator
Use it to understand fee drag and compare otherwise similar strategies. Costs matter, but risk, diversification, taxes, services, and behavior also affect outcomes.
FAQ
What fees should I include?
Consider fund expense ratios plus applicable advisory or platform fees, while avoiding double counting.
Are returns guaranteed?
No. The return is a constant hypothetical assumption used to isolate fee impact.
Why is the impact larger than annual fees added together?
Money removed by fees also loses the future growth it could have earned.