Fee Drag Calculator
See how expense ratios silently erode your wealth over time.
Investment
$
$
%
years
Expense Ratios
%
%
Without Fees$1,349,2580.00% TER
Fund A (0.03%)$1,339,627-$9,631 drag
Fund B (0.50%)$1,197,757-$151,501 drag
Cost of Choosing B over A$141,870
Over 30 years, the 0.47% difference compounds into $141,870 of lost wealth.
Key Insight
A 0.50% fee difference on a $100,000 portfolio with $500/mo contributions over 30 years costs you approximately $100,000+ in lost wealth. Always compare TERs before investing.
Year-by-Year Impact
| Year | No Fees | Fund A | Fund B | Difference |
|---|---|---|---|---|
| 5 | $176,054 | $175,831 | $172,362 | $3,469 |
| 10 | $282,725 | $282,039 | $271,504 | $10,535 |
| 15 | $432,335 | $430,792 | $407,336 | $23,456 |
| 20 | $642,171 | $639,134 | $593,439 | $45,695 |
| 25 | $936,478 | $930,935 | $848,416 | $82,519 |
| 30 | $1,349,258 | $1,339,627 | $1,197,757 | $141,870 |
Methodology
Fee drag is calculated by reducing the gross return by each fund's expense ratio, then compounding monthly contributions at the net return rate. This models the real cost of higher fees over time. The difference grows non-linearly due to compounding — a seemingly small 0.10% difference compounds into significant wealth destruction over decades.
💬 Frequently Asked Questions
A seemingly small 1% annual fee can consume 25-30% of your total returns over 30 years. On a $100,000 portfolio growing at 7%, a 1% fee costs you approximately $125,000 in lost wealth over 30 years compared to a 0.03% index fund.
The Total Expense Ratio (TER) is the annual fee charged by a fund, expressed as a percentage of assets. A TER of 0.03% (like VOO) means you pay $3 per year for every $10,000 invested. Active funds often charge 0.50-1.50%, while index funds can be as low as 0.03%.
For funds tracking the same index, yes — lower fees directly translate to higher returns. But across different strategies, performance matters too. However, research consistently shows that most actively managed funds underperform their benchmark after fees over 10+ year periods.