Is one percent really that much?

Over twenty-five years at twelve percent gross, yes: it costs roughly a fifth of the final corpus. The annual figure hides that the cost compounds.

Investmentmutual funds

Expense Ratio Impact Calculator

What an expense ratio difference costs over time. A gap of one and a half percentage points sounds trivial and typically consumes a quarter of the final corpus over twenty-five years.

Also called: ter impact calculator, fund fee cost.

Cost of the higher expense ratio

$5,252,959.34

$5,252,959.34 over 25 years. The 1.8% fund grows to $12,669,829.33 and the 0.4% fund to $17,922,788.67. A difference of 1.4% percentage points a year costs 29.31% of the final corpus.

Higher cost fund

$12,669,829.33

Lower cost fund

$17,922,788.67

Difference in expense ratio

1.4%

Cost as a share of the corpus

29.31%

Total invested

$1,000,000.00

Cost in the first year alone

$14,000.00

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

The expense ratio is deducted from the return every year, so its effect compounds exactly as the return does. That is why the annual figure is misleading: 1.8 percent against 0.4 percent sounds like 1.4 percent, but over twenty-five years it removes a compounding stream that would itself have compounded. The first year cost is shown alongside the lifetime cost to make the difference between the two visible.

the expense ratio is subtracted from the return each year, so its cost compounds like the return does

r: Gross return
e: Expense ratio

Method and limits

What it assumes

A constant gross return and a constant expense ratio.

What it deliberately does not model

A higher-cost fund may deliver a higher gross return, which this holds equal by construction.
Direct plans have lower expense ratios than regular plans for identical portfolios, which is the cleanest case for this comparison.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Is one percent really that much?: Over twenty-five years at twelve percent gross, yes: it costs roughly a fifth of the final corpus. The annual figure hides that the cost compounds.