Why small fees matter
Investment fees are usually quoted as a percent of your balance each year, so they are charged on everything you have invested, every year, including past growth. The Financial Industry Regulatory Authority (FINRA) notes that a small percentage difference in fees can eat away a big chunk of your overall investment returns over time, citing an SEC illustration of a $100,000 investment earning 4% for 20 years (FINRA: Fees and Commissions). This calculator lets you see the effect with your own numbers.
Types of fees
- Ongoing expenses: a fund's yearly operating expenses (the expense ratio), and plan or account fees, for example in a 401(k).
- Advisory fees: for advice or portfolio management, often a percent of the assets managed.
- Transaction costs: commissions, markups, mutual fund sales loads and surrender charges. These are not yearly percentages, so they are not in this calculator.
FINRA also reminds investors that zero commissions do not mean zero fees.
How the calculator works
- Each month the balance grows by (return − total yearly fees) ÷ 12, then your monthly contribution is added.
- Option A and option B use the same return and contributions, with different fees.
- "Cost of fees vs no fees" compares each option with the same investment without fees.
The return is your assumption, not a forecast. Real returns go up and down and can be negative.
An example
$10,000 invested now plus $300 a month for 30 years, at an assumed 6% yearly return before fees. With total fees of 0.1% a year, the balance would be about $354,109; with 1% a year, about $294,355. The difference is about $59,754, while you put in $118,000 in both cases. With $100,000 at 4% for 20 years and no contributions, fees of 0.25% versus 1% a year make a difference of about $29,377 with monthly compounding.
Where to find your fees
- A fund's expense ratio is in its prospectus and fact sheet; FINRA's Fund Analyzer lets you compare the cost of owning different funds.
- Advisory and account fees are in your advisory agreement or account fee schedule; 401(k) plans send fee disclosures.
- Compare growth with and without contributions with the investment calculator and the compound interest calculator.
Frequently asked questions
How much does a 1% fee cost?
It depends on your balance, contributions, returns and time. In the example above, 1% instead of 0.1% a year costs about $59,754 over 30 years.
What is an expense ratio?
A fund's yearly operating expenses as a percent of the money invested in it. It is taken from the fund's assets, so you do not see it as a separate bill.
Does zero-commission trading mean no fees?
No. FINRA notes that zero commissions do not mean zero fees: funds still have expenses, and accounts may have other fees.
Is the return in the calculator a forecast?
No. It is an assumption you choose to show the effect of fees. Real returns change from year to year.
Is my information saved?
No. The numbers stay in your browser and are not sent to us.