Investment Fee Drag Calculator

Investment fee drag calculator for expense ratios and advisory fees

Investment fees feel small because they are quoted as a percentage, often well under 2% per year. The problem is compounding. A fee reduces your balance every year, which then reduces the amount that can grow in future years. Over a long time horizon, even a modest fee can create a large gap between what you could have had and what you end up with.

This investment fee drag calculator is built for one primary decision: estimating how much an ongoing annual fee (like an expense ratio, platform fee, or adviser fee) reduces your ending portfolio value over a given number of years. It compares two scenarios using the same starting balance, the same optional monthly contributions, and the same assumed return. The only difference is the fee. That makes the output easy to interpret: the gap between the two endings is the fee drag.

Use it when you are comparing funds or accounts with different annual fees, or when you want to sanity-check whether a higher-cost option would need to deliver meaningfully better performance to justify the extra drag. This calculator is intentionally not a full retirement planner and it does not model taxes, withdrawals, or changing return sequences. It is a focused comparison tool that answers a single question clearly.

Assumptions and how to use this calculator

• The annual return you enter is a steady average return used for projection, not a prediction of real market behavior.
• Fees are modeled as an annual percentage drag on assets under management, applied continuously through an equivalent net return (a practical approximation).
• Monthly contributions are assumed to be made at the end of each month, and contributions are not increased over time unless you change the input.
• Returns can be negative, but the calculator does not model volatility or sequence-of-returns risk. It uses one constant rate for the entire horizon.
• This is a pre-tax, pre-inflation comparison. Taxes, spreads, transaction costs, and inflation are excluded to keep the fee impact isolated and comparable.

Common questions

Is the result the total fees I will pay?

No. The fee drag is the difference between the ending value with no fee and the ending value with the fee. That gap includes both the fees deducted and the growth you lost because those deducted amounts could not compound. It is usually larger than the sum of fees you might imagine from looking at one year in isolation.

What fee should I enter for an ETF or mutual fund?

Use the expense ratio as a starting point. If you also pay an adviser fee, platform fee, or wrap fee, add it in the Advanced field as an additional annual fee. The calculator combines them into one total annual fee so you can compare the overall drag of different setups.

Why does a 1% fee look so large over 20 or 30 years?

Because it reduces the base that compounds every year. A 1% fee is not a one-time haircut. It is an ongoing drag. Over long periods, the compounding effect can make the ending difference multiple times larger than what you would expect from simply multiplying 1% by the number of years.

What if returns and fees are not charged monthly?

This calculator converts the annual rates into an equivalent monthly rate to model steady compounding and monthly contributions. In real products, fees may be accrued daily and deducted monthly or quarterly, and returns vary. For planning comparisons, the equivalent-rate approach is typically close enough to highlight the practical difference between fee levels.

How can I use this to compare two funds with different fees and returns?

Keep the inputs the same and change only the fee to see the pure fee impact. If you believe one fund might deliver a different return, run a second scenario by changing the return input too. The key is to isolate one variable at a time so you understand whether the higher fee is being paid for something that is likely to matter.