INVESTMENT FEE IMPACT

Investment Fee Impact Calculator

Compare a monthly contribution plan with and without an annual percentage fee to see ending value lost and the net annual return after fees.

Why a 1% fee is not a 1% haircut to the ending balance

An annual percentage fee reduces the amount that stays invested, so later compounding applies to a smaller balance. The longer the term, the larger that gap usually becomes. Contributions are treated as end-of-month.

Net annual return = (1 + gross annual return) × (1 − annual fee) − 1
Balance without fees = principal and monthly contributions compounded at the gross return
Balance after fees = the same cash flows compounded at the net annual return
Ending value lost to fees = balance without fees − balance after fees

Example

$100,000 starting principal, $1,000 a month, a 6% gross return, a 1% annual fee, and 10 years produce a 4.94% net annual return. The ending gap is both the fees charged and the compounding those amounts would have earned.

Fund and ETF fees can differ

Expense ratios may be taken daily from net asset value. Trading costs, loads, taxes, and tracking difference are outside this single annual percentage.

Frequently asked questions

Can I subtract the fee from the return?

A 6% return minus a 1% fee is a 5% shortcut. This page grows first and then applies the fee, so 6% and 1% become 4.94%.

Is the ending gap equal to fees paid?

The gap also includes the later compounding the deducted amounts would have earned.

Are trading commissions included?

Only an annual percentage of assets is modelled.

Is the gross return a forecast?

It is a scenario you type. Actual investments can gain or lose money.

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Calculations run in your browser. Values are not uploaded or stored.