Expense Ratio Calculator
1% a year takes about a quarter of the pot over 30 years.
Work out Expense Ratio. 1% a year takes about a quarter of the pot over 30 years. States the assumption instead of hiding it.
Lost to fees over 30 years
186,876
24.5% of the pot you would otherwise have
The headline percentage badly understates what a fee costs, because it is charged every year against a balance that is meant to be growing. A 1% charge over thirty years typically removes about a quarter of the final pot — not 1%, and not 30%. It compounds against you in exactly the way the returns compound for you. Every pound taken in fees is also every pound of the growth that pound would have produced, which is why the gap widens so sharply with time. This is the strongest argument for low-cost index funds, and it is arithmetic rather than opinion. The difference between 0.1% and 1% is small enough to ignore in any single year and large enough to dominate a lifetime of investing.
How the Expense Ratio Calculator works
What a fund's expense ratio actually costs over a holding period, against the same fund without it. The headline percentage badly understates it, because the fee compounds against you every year on a growing balance.
Also known as: how much do fund fees cost me · 1 percent fee over 30 years · impact of investment fees · index fund versus active fees
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
How much does a 1% fee really cost?
About a quarter of the final pot over thirty years at typical returns. Not 1%, and not 30% — the fee compounds against you, so the gap widens sharply with time.
Why is the effect so much larger than the headline number?
Because every pound taken in fees is also every pound of growth that pound would have produced. The loss compounds in exactly the way the returns do.
What is a reasonable expense ratio?
Broad index funds are widely available under 0.15%, and many under 0.05%. Actively managed funds typically charge 0.5 to 1.5%, and the evidence that the extra buys anything is thin.
Do platform fees count too?
They should. Platform charges, transaction fees and any adviser fee all reduce returns the same way, so the number to compare is the total cost of ownership rather than the fund's ratio alone.
Is a cheaper fund always better?
Not always, but cost is the most reliable predictor of relative performance that anyone has found. It is the one variable you know in advance and the one you fully control.
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