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
| Field | What to enter |
|---|---|
| Initial investment | Amount in your currency |
| Yearly investment | Amount in your currency |
| Duration | Units: years, months |
| Expected annual return | In % |
| Expense ratio | In % |
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 investment | Future value of total investment |
|---|---|
| 5,000 | 547,778.77 |
| 7,500 | 564,152.43 |
| 10,000 | 580,526.09 |
| 12,500 | 596,899.75 |
| 15,000 | 613,273.41 |
| 20,000 | 646,020.73 |
Formula
Effective return = (1 + return) × (1 − expense ratio) − 1FV = initial × (1 + r_eff)^n + yearly × [(1 + r_eff)^n − 1] ÷ r_effCost of fees = FV without fees − FV with feesWorked 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 %.
Frequently asked questions
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.