Funds & ETFsCalculator
Fee drag calculator
See how much a yearly fund or advisory fee could cost over time. Reproduces the SEC's fee example and shows the formula used.
Fee drag calculator
Result
- What the fee costs you
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- Ending value with no fee
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- Ending value after the fee
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- Share of the no-fee value lost
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Quick answer
Enter an amount, a yearly return before fees, a yearly fee and a number of years. The calculator compares the ending value with and without the fee. Because the fee is taken every year from a growing balance, its cost compounds.
Why do small fees matter so much?#
The SEC explains that fees reduce the amount of money in your portfolio that is earning a return[1]. Money paid as a fee this year cannot grow next year. Over decades the missing growth can be larger than the fees themselves.
The SEC's example: $100,000 for 20 years at 4% growth
How is the result calculated?#
Each year the balance grows by the return, and then the fee is taken as a percentage of the balance. After n years: value = amount × [(1 + return) × (1 − fee)]ⁿ. Without the fee: value = amount × (1 + return)ⁿ. With the SEC's inputs this formula gives $208,413 for a 0.25% fee and $179,213 for a 1% fee — matching the bulletin's rounded figures[1].
Worked example
$100,000, 4% a year before fees, 1% yearly fee, 20 years
Without the fee the balance would reach $219,112.31. With the fee it reaches $179,213.48. The fee costs $39,898.83 — about 18.2% of the no-fee result.
| Fee | Ending value | Cost vs no fee |
|---|---|---|
| 0% | $219,112.31 | — |
| 0.25% | $208,413.03 | $10,699.28 |
| 1.00% | $179,213.48 | $39,898.83 |
Figures computed in code from the stated inputs; rounded to the nearest cent or tenth.
Where do you find the fee to enter?#
For a mutual fund or ETF, use the expense ratio: total annual fund operating expenses as a percentage of the fund's average net assets, shown in the prospectus fee table[2] — see expense ratios explained and how to read a fund prospectus. For an advisory account, use the yearly advisory fee as a percentage of assets. Add the two if you pay both.
What mistakes do beginners make?#
Comparing returns before fees
What reaches you is the return after fees, not before. Compare returns after costs, and check the expense ratio first.
Forgetting the layers
An advisory fee on top of a fund's expense ratio is two fees. Enter the total you pay each year, not just one of them.
Thinking the fee is too small to matter
Run the numbers for 0.1% and 1%. Over 30 years the gap is usually large enough to change a decision.
What else do beginners ask?#
Is the fee taken all at once?
No. Mutual funds and ETFs pay their operating expenses out of fund assets instead of billing you directly[2], so you never see a bill. The yearly calculation here is an approximation of that deduction.
Does a higher fee ever pay for itself?
Only if the investment earns more than a cheaper alternative by at least the fee difference, every year. This calculator cannot tell you that; it shows what the fee costs if returns are the same.
Sources
Numbers in brackets in the text point here. Grade A = primary source (regulator, statistics agency, law or official document).
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Further reading: