Bureau of Wealth

Investment Fees Calculator

By the Bureau of Wealth team Updated

This calculator is general information, not financial advice. Check your own figures with the provider or a qualified adviser before acting on them.

Enter what you invest, a return before fees and two yearly fee levels to see how far apart the balances end up, and what each fee costs you in lost growth.

The expense ratio plus any advisory or account fee.

Check the highlighted fields to see your results.

What this calculator assumes

  • Each fee is a percentage of your balance charged every year, like a fund's expense ratio or an adviser's fee on assets under management. Flat dollar fees, commissions and sales loads are not modeled.
  • The return before fees is the same every year. Actual returns vary and can be negative, so the balances are illustrations of the gap fees create, not forecasts.
  • The fee is taken from the grown balance, so a 6% return with a 1% fee grows the account by 4.94% a year, not 5%. Growth and fees are spread evenly across the months.
  • You add the same contribution at the end of each month and make no withdrawals.
  • Taxes are not included. In a taxable brokerage account, tax on dividends and gains would lower all three balances.

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How the cost of a fee is worked out

A yearly fee does two kinds of damage. It removes money from your account, and that money can no longer earn a return for the rest of the time you are invested. Investor.gov, the SEC's investor education site, makes the same point: fees reduce the amount of money in your portfolio earning a return, so small ongoing fees can have a big impact over time.

The calculator runs three versions of your account side by side: one with fee A, one with fee B and one with no fee at all. Each month, every version grows by its return after fees and then receives your contribution. "Fee A costs you" is the gap between the no-fee balance and the fee A balance at the end, which includes the growth the fees would have earned. The headline figure is the gap between fee A and fee B.

A worked example

Investor.gov illustrates fees with a $100,000 investment growing 4% a year for 20 years. It shows the portfolio worth about $208,000 with a 0.25% fee, $198,000 with 0.50% and $179,000 with 1.00%. Entering the same figures here gives $208,413, $198,211 and $179,213. With no fee at all the balance would be $219,112, so a 1% fee costs $39,899 over 20 years.

Now a more typical saver: $10,000 to start, $300 a month, a 6% return before fees and 30 years. With a 1% fee the balance is $284,528. With a 0.1% fee it is $342,560, a difference of $58,032. You paid in $118,000 in both cases, so the higher fee costs roughly half as much as everything you contributed.

Why the gap widens over time

Over 10 years the same plan shows a gap of $3,844 between the two fees. Over 30 years it is $58,032. The fee is charged on a balance that keeps growing, and each dollar removed early would have compounded for decades. That is why fee differences that look trivial on a single year's statement matter so much for retirement accounts.

Finding what you actually pay

For mutual funds and ETFs, look for the expense ratio in the standardized fee table that every fund prospectus must include. It covers the fund's yearly operating expenses, such as management fees and 12b-1 fees. If an adviser manages your money, their fee is usually a separate percentage on top, disclosed in documents such as Form CRS and Form ADV. Add the two together for fee A or fee B.

Ask your adviser or plan provider to explain every fee if anything is unclear, and check your statements. A higher fee can be worth paying for advice you value, but you should know what it costs.

Related calculators

To see growth without fees in more detail, including daily or monthly compounding and a year-by-year table, use the compound interest calculator. To measure what an investment you already hold has returned after costs, try the ROI calculator.

Frequently asked questions

What is an expense ratio?

It is the percentage of a fund's average net assets used each year to pay its operating expenses, such as management and 12b-1 fees. You never pay it as a bill; it is taken from the fund, which lowers your return.

Is a 1% advisory fee a lot?

It depends on what you get for it, but the cost compounds. In the example above, 1% against 0.1% leaves you $58,032 worse off after 30 years. Compare that figure with the value of the advice.

Why is the cost bigger than the fees I actually paid?

The calculator also counts the growth that money would have earned if it had stayed invested. That lost growth is usually the larger part of the cost over long periods.

Does this include commissions or sales loads?

No. It only models ongoing fees charged as a yearly percentage of your balance. One-off charges when you buy or sell reduce your balance too, so check the prospectus and fee schedule for them.

Can a fund cost more than its expense ratio?

Yes. Investor.gov notes that some costs are not in the expense ratio, such as the trading costs a fund pays when it buys and sells securities. Adviser fees and account fees are also charged separately, so add them to fee A or fee B.

Sources

Figures come from institutions millions of people rely on. How we keep calculators accurate.