Tool · Compounding
Fee-Drag Calculator
A small yearly fee can make a noticeable difference over time. Compare two combinations of fund expense ratios and separate advisor fees, using the same savings and return assumptions.
Corrected September 4, 2026: Annual-return calculation and fee descriptions corrected. View correction history.
All calculations run locally in your browser. Your inputs are never transmitted or stored.
Shared Inputs
Effective annual return before fees. The 7% starting value is an illustration, not a forecast.
Scenario A
Scenario B
Scenario A Ending Value
Scenario B Ending Value
Ending-value difference (A minus B)
At Year
Divergence Over Time
Every 5 years shown
| Year | Scenario A | Scenario B | Gap | Gap % |
|---|---|---|---|---|
In plain terms
Over years, Scenario A ends than Scenario B under these assumptions. The difference includes both modeled fees and the growth those dollars could have earned. It is not a bill showing fees actually paid.
All amounts are in today's purchasing power. Contributions are assumed eligible and constant after inflation. This is a fee comparison, not a check of your IRA contribution limit or a recommendation to switch investments.
How it works
The math behind the bars
The compounding model
Each scenario is simulated month-by-month for periods. At each step:
modeled net annual return = gross − expense_ratio − aum_fee
net monthly rate = (1 + modeled net annual return)1/12 − 1
balance *= (1 + net monthly rate)
balance += (annual_contribution / 12)
Rates in the formula are decimals: 7% is 0.07. The input is an effective annual return, so twelve months compound to the entered annual rate, not a higher rate. Contributions are split into twelve equal month-end deposits.
Subtracting annual percentage fees from the annual return is a simplified comparison convention, not a reconstruction of daily fund expenses or an advisor's billing schedule. All returns and contributions are real (after inflation); no separate inflation adjustment is applied. The tool assumes the same gross return in both scenarios and does not model taxes, changing returns or additional costs.
Why fees look so small and cost so much
Fees reduce both the money left invested and its opportunity to grow. For a simple illustration, $10,000 with no further deposits grows to about $76,123 over 30 years at 7% a year. At 6% after a modeled one-percentage-point fee reduction, it grows to about $57,435. The difference is about $18,688, or 24.5% of the no-fee ending balance.
Those figures are hypothetical and use the model above. Adding contributions, changing returns or changing the horizon changes the percentage difference; there is no universal fee-drag percentage.
Which fees are included?
The tool adds the fund's expense ratio to any separate advisor fee charged as a percentage of assets under management (AUM). A fund's expense ratio includes its 12b-1 distribution fees, if any. Do not add those again.
Flat platform charges, sales loads, trading costs and bid-ask spreads are not modeled. Check the prospectus for your exact fund share class and your advisor's fee agreement. The SEC's fund-fee guide explains which costs belong in each category.
What the starting values mean
Scenario A starts with a 0.03% expense ratio and no separate advisor fee. Scenario B starts with a 0.75% expense ratio plus a 1.00% advisor fee, totaling 1.75%. These are editable illustrations, not current quotes for particular funds or providers. Replace them with the charges that apply to your comparison.
User Guide
How to use the Fee-Drag Calculator
Start with two investments or service arrangements you want to compare. This calculator holds savings and gross returns equal, then changes only the modeled annual fees. It helps you see the size of that one trade-off; it cannot tell you which investment or advisor is best for you.
Who should use this tool
The comparison is most useful when the investments have similar holdings and risk. If the investments or services differ, lower fees alone do not settle the choice. A retirement-plan rollover also involves issues this tool does not evaluate, including account protections, withdrawal rules and available services.
Walking through the inputs
Starting balance and annual contribution. Enter the amount already invested and the amount you plan to add each year. New contributions are split into equal monthly deposits and added at month-end. Set contributions to zero to compare only an existing balance. The tool does not check contribution eligibility or future IRA limits.
Scenario A and Scenario B. Enter each fund's expense ratio and any separate advisor AUM fee. Either scenario may be cheaper. A 0.50% annual fee is entered as 0.50, not 50. Avoid counting a fee twice if your agreement already includes it.
Gross annual return. Enter a hypothetical effective annual return before fees but after inflation. Because the calculation uses real returns, keep contributions in today's dollars too. A constant real contribution assumes its future dollar amount rises with inflation. This is a planning assumption, not a prediction of IRS limits.
Years. Choose a whole-number horizon from 1 to 60. Try a shorter and longer horizon to see how time changes the comparison.
How to read the result
The cards show each ending balance and A minus B. A positive difference means A ends higher; a negative difference means B ends higher. The percentage uses A's ending balance as its denominator.
The bars compare both ending balances with the starting balance plus new contributions. The table shows every fifth year and the final year. On a phone, scroll the table sideways to see every column. The dollar difference combines fees and forgone growth; it is not a sum of actual invoices.
Keep the comparison fair
- Do not confuse lower fees with lower risk. The calculator assumes identical gross returns; actual investments may behave differently.
- Use a pre-fee return. If you enter a return already reduced by the expenses entered below it, the tool subtracts those expenses again.
- Check what is missing. Fixed account fees, trading costs, loads, taxes and changing fee schedules are outside this model.
- Do not double-count 12b-1 fees. These are part of a fund's expense ratio when charged, not a separate addition to that ratio.
After you see the gap
Use the result to ask better questions: Are the investments comparable? What services does the advisor provide? Would switching create other costs or give up useful account features? Fees matter, but the calculator deliberately does not turn one number into a recommendation.
For the separate question of which investments fit which account type, see our asset placement guide.
Corrections and updates
September 4, 2026: Corrected monthly compounding to match the stated effective annual return. Clarified that the ending-value difference includes modeled fees and forgone growth, corrected 12b-1 fee treatment, and removed unsupported provider comparisons and descriptions of unavailable outputs. The two scenarios can now show either a positive or negative difference.