Expense Ratio Impact Calculator
See the lifetime cost of a fund’s expense ratio — how much a fraction of a percent a year quietly compounds away from your balance.
How it works
Net return = gross return − expense ratio · Balance = P(1 + r)^n + C[((1 + r)^n − 1) ÷ r] · Fee cost = gross balance − net balance
A fund’s expense ratio is skimmed off your return every year, so it does not just cost you the fee — it costs you all the future growth that money would have earned. Because the drag compounds, a difference of half a percent a year can quietly consume a large slice of a multi-decade balance. This is why low-cost index funds tend to beat higher-fee funds with the same underlying returns.
Worked example
Invest $10,000 plus $6,000 a year for 30 years at a 7% gross return. With no fees it grows to roughly $690,000; a 0.5% expense ratio cuts the return to 6.5% and the balance to about $625,000 — a lifetime cost near $65,000 from half a percent a year.
Frequently asked questions
Why does a 0.5% fee cost so much more than 0.5%?
Because it is charged every year and reduces the base that compounds. Over decades you lose not only the fees but all the returns those fees would have generated — the loss grows geometrically, not linearly.
What counts as a low expense ratio?
Broad index funds and ETFs often charge under 0.10%, while actively managed funds can run 0.5%–1% or more. Even a 0.2% difference compounds meaningfully over a long horizon, so the expense ratio is one of the few return factors you fully control.
Does this include trading costs or loads?
No. It models only the annual expense ratio. Sales loads, transaction fees and bid-ask spreads are additional drags that would raise the true cost further.
Related calculators
Educational estimate, not investment advice. Returns are hypothetical and not guaranteed.