Investment Fee Drag Calculator

Fees reduce your net return each period. Over long horizons, even small differences in annual fees can compound into large differences in ending wealth. This calculator compares two fee scenarios using a simple compounding model.

1. Net return after fees

Gross annual return (decimal):
r_gross

Annual fee (decimal):
f

Net annual return:
r_net = r_gross − f
        

For example, a 7% gross return with a 1% fee gives a 6% net return. A 0.10% fee gives a 6.9% net return.

2. Compounding with contributions

Starting balance:
B_0

Annual contribution:
C

For year t (1..N):
B_t = (B_{t−1} + C) × (1 + r_net)
        

This assumes contributions are added at the start of each year and then grow at the net return.

3. Estimating total fees paid

Approximate fees in year t:
Fees_t ≈ B_{t−1} × f

Total fees:
TotalFees ≈ Σ Fees_t over all years
        

This approximation treats fees as a percentage of the prior-year balance. It’s a simple way to estimate how much you pay over time.

4. Fee drag

Fee drag (ending wealth difference):
Drag = EndingBalance_lowFee − EndingBalance_highFee

Extra fees paid:
ExtraFees = TotalFees_highFee − TotalFees_lowFee
        

These metrics show both the direct cost of higher fees and the indirect cost of lower compounding over time.