How much does a 1% expense ratio actually cost over time?

It's charged on your whole balance every year, not just your return, so it compounds against you the same way growth compounds for you — over decades a 1% fee can consume a meaningful fraction of the ending balance. This calculator runs the projection with and without the fee so the gap shows up as a dollar figure.

Is a lower expense ratio always worth switching funds for?

The math favors it, but a fund's after-fee return is what matters, not the fee in isolation — a higher-fee fund that also outperforms can still win. This calculator isolates the cost of the fee itself so it's one clear input to that broader comparison, not the whole answer.

Does the expense ratio come out of my contributions or my growth?

Neither directly — funds deduct it from the fund's assets continuously, which shows up as a slightly lower return than the fund's gross performance. This calculator models it as a steady drag against the annual return for the same effect.

Calculator

Mutual Fund Calculator

A 1% expense ratio sounds small next to a double-digit return, which is exactly why it's so easy to ignore — it's charged on the whole balance every year, not on the return, so it compounds against you the same way growth compounds for you. This projects an initial investment plus regular contributions with and without the fee, and shows the gap in dollars, not percent.

Results

Real-Time Calculation

Enter your initial investment, contribution, and expected return, then press Calculate.

Investment

Initial investment (Optional)

Monthly contribution (Optional)

Years (Optional)

Return & fee

Expected annual return

Expense ratio (Optional)

How this is calculated

For educational purposes only. Results are estimates and do not constitute financial, tax, or legal advice. Consult a qualified professional before making any financial decisions.

How to use it

Enter your initial investment and any monthly contribution, then the fund's expected annual return and expense ratio.

Press Calculate for your projection, or flip on Real-Time Calculation to have it update as you type. Hover the ? beside any section for what it means.

Try comparing a 0.03% index fund expense ratio against a 1% actively managed one on the same numbers — the "cost of the expense ratio" stat is the whole point of this tool.

Assumptions

The expense ratio is modeled as a steady drag on the annual return — subtracted from the gross return before it's divided into a monthly rate — rather than a precise simulation of daily NAV-based fee accrual.
Both the fee-free and net-of-fee runs use the identical contribution schedule, so the only difference between them is the fee itself.
Assumes the contribution amount and the rate of return stay constant for the whole term, with no withdrawals, taxes, or additional fees beyond the expense ratio.

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