# Expense Ratio Calculator

URL: https://speedycalculator.com/calculators/finance/expense-ratio/
Last updated: 2026-10-25

> The expense ratio calculator shows how much a fund's yearly expense ratio costs you over time: the future value of an initial investment and yearly additions with and without fees, the total cost of the fund and your effective return.

## Inputs

- Initial investment
- Yearly investment
- Duration (years, months)
- Expected annual return (%)
- Expense ratio (%)

## Results

- Effective investment return
- Future value of total investment
- Value with no fees
- Total cost of the fund's fees
- Share of potential wealth lost to fees

## Formula

```
Effective return = (1 + return) × (1 − expense ratio) − 1
FV = initial × (1 + r_eff)^n + yearly × [(1 + r_eff)^n − 1] ÷ r_eff
Cost of fees = FV without fees − FV with fees
```

## Explanation

Expense ratios look small, but they compound. On $100,000 over 30 years at 7%, a 1% fee costs about $190,000 compared with a 0.05% index fund. Low-cost index funds charge 0.03–0.20%.

### How to use the Expense Ratio Calculator

- **Initial investment**
- **Yearly investment**
- **Duration**
- **Expected annual return**
- **Expense ratio**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the initial investment, yearly additions, investment period, expected return and the fund's expense ratio.

### Tips

- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.

### Common mistakes to avoid

- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).

### Inputs explained

FieldWhat to enterInitial investmentAmount in your currencyYearly investmentAmount in your currencyDurationUnits: years, monthsExpected annual returnIn %Expense ratioIn %

### What each result means

- **Effective investment return** = ((1 + [Expected annual return]÷100)×(1 - [Expense ratio]÷100) - 1)×100
- **Future value of total investment** = fvc([Effective investment return]÷100, [Duration], [Initial investment], [Yearly investment], 0)
- **Value with no fees** = fvc([Expected annual return]÷100, [Duration], [Initial investment], [Yearly investment], 0)
- **Total cost of the fund's fees** = [Value with no fees] - [Future value of total investment]
- **Share of potential wealth lost to fees** = [Total cost of the fund's fees]÷[Value with no fees]×100

### Example values

How the main result changes when **Initial investment** changes and everything else stays at the example values above:

Initial investmentFuture value of total investment5,000547,778.777,500564,152.4310,000580,526.0912,500596,899.7515,000613,273.4120,000646,020.73

## Worked example

Inputs — Initial investment: $10,000; Yearly investment: $6,000; Duration: 30 years; Expected annual return: 7 %; Expense ratio: 0.5 %.

Results — Effective investment return = 6.465 %; **Future value of total investment = $580,526.09**; Value with no fees = $642,887.27; Total cost of the fund's fees = $62,361.18; Share of potential wealth lost to fees = 9.7 %.

## FAQ

**What is a good expense ratio?**
Under 0.2% for index funds; actively managed funds often charge 0.5–1%.

**How are expense ratios charged?**
They are deducted from the fund's assets daily – you never see a bill.

**Do small fees really matter?**
Yes – over decades they can cost a large share of your final balance.

**What formula does the Expense Ratio Calculator use?**
Effective return = (1 + return) × (1 − expense ratio) − 1.


## Sources

- [U.S. SEC – Mutual fund fees and expenses](https://www.sec.gov/)