Invest Insights

What does a fund's fee cost you over time?

Enter a starting balance, what you add each year, how many years and an assumed yearly return. Then enter two yearly fees, such as two funds' expense ratios, or an expense ratio with and without an advisory fee on top. The result shows the ending balance under each fee, the difference, the fees charged and the gap year by year. Our guide Expense ratios: what a fund's fee costs you explains the idea.

An illustration, not a forecast or a recommendation. Results are based only on the figures and the assumed return you enter. Real returns vary from year to year and can be negative. Taxes, trading costs and the way funds actually deduct fees are simplified. The figures below are a fictional example. Calculations run in your browser; nothing you enter is sent or saved. See our privacy notice for site analytics.

Your money
0 if you're starting from nothing.
Added at the end of each year. 0 if none.
A whole number from 1 to 60.
Your assumption, not a forecast. From −50 to 30; negative values are allowed.
The two fees
For example an expense ratio of 0.05%. From 0 to 10.
To compare a fund plus an advisory fee, add the two, for example 0.05 + 1.00 = 1.05.

Use dollar amounts with a decimal point (for example 1,000.50) and percentages as plain numbers (0.5 means 0.5%). Every box needs a value; enter 0 where one doesn't apply.

How this works

The same steps are applied every year, separately for fee A and fee B:

  1. the balance grows by the assumed return: balance × (1 + return);
  2. the fee is charged as a percentage of that grown balance: fee charged = balance × (1 + return) × fee;
  3. the yearly contribution is added at the end of the year, so it starts earning the next year.

So each year, end balance = start balance × (1 + r) × (1 − f) + C. Over n years, with g = (1 + r) × (1 − f), the ending balance is B × gⁿ + C × (gⁿ − 1) ÷ (g − 1) (or B + C × n when g = 1), where B is the starting balance, C the yearly contribution, r the assumed return and f the fee, as decimals. With no contributions and no return, that is simply B × (1 − f)ⁿ.

Total fees charged is the sum of each year's fee. The difference is fee A's ending balance minus fee B's.

Assumptions and what it leaves out

  • The return is the same every year and is your assumption. Real returns change every year, can be negative, and past returns don't guarantee future ones.
  • The fee is a constant yearly percentage charged once a year. Funds actually deduct their expense ratio a little at a time from fund assets, and an adviser may bill quarterly; the results will differ slightly.
  • Taxes, trading costs, sales loads, account fees and inflation are left out.
  • This is general education, not a recommendation of any fund, adviser or strategy.

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