Expense Ratio Calculator: What Fund Fees Really Cost You
Compare two funds' yearly fees. See how much less you'd end up with over 10, 20 or 30 years, in dollars, as you type.
In this example, over 30 years, the 1% fund would leave you about $59,319 poorer than the 0.03% fund.
The 0.03% fund grows to $309,261. The 1% fund grows to $249,942. You put in $82,000.
A 1% fee looks small, but over 30 years it eats about 20% of what your money would grow to with no fee.
Fees taken along the way: $1,015 in the 0.03% fund and $29,223 in the 1% fund. So the extra fees come to $28,208. The rest of the $59,319 gap is growth those extra fees would have earned.
Assumes both funds earn the same return before fees, the same every year, with fees taken monthly. Real returns go up and down, and past returns are no guide to future ones. For learning, not advice.
The short answer
An expense ratio is the yearly fee a fund charges, as a share of your money in it. A 1% expense ratio takes $10 a year for every $1,000 you hold.
It sounds small. Over decades it isn't. Put $10,000 in today and add $200 a month for 30 years at 7% a year. A 1% fee leaves you about $61,000 less than no fee at all. That's about 20% of what you'd have had.
A low-cost index fund charging 0.03% would cost you about $2,000 over the same 30 years.
What the calculator does
Type how much you invest, what you add each month, for how long and the return you expect. Then type two funds' expense ratios. You see:
- The gap in dollars between the two funds at the end.
- What each fund grows to, next to the money you put in.
- The share of your money the higher fee eats over the years.
- A chart of both funds growing side by side.
It works in your browser as you type. It's free, with no signup.
What is an expense ratio?
Every fund has costs: managers, research, trading, admin. The expense ratio covers them. It's shown as a yearly percentage of what you hold.
You never get a bill. The fund takes the fee quietly from its own value, a little every day. So the price you see is already after the fee, which is why it's easy to miss.
Typical ranges:
- Index funds that track a market like the S&P 500 often charge 0.03% to 0.20%.
- Actively managed funds, where managers pick stocks, often charge 0.5% to 1% or more. The calculator starts with 1% as an example of a higher-cost fund.
You can find a fund's expense ratio on its fact sheet, its website or your broker's fund page.
How much fees cost over 30 years
$10,000 today plus $200 a month for 30 years, growing 7% a year before fees:
| Expense ratio | You end with | Less than no fee | Share lost |
|---|---|---|---|
| 0% | $311,336 | — | — |
| 0.03% | $309,261 | $2,074 | 1% |
| 0.10% | $304,482 | $6,854 | 2% |
| 0.25% | $294,518 | $16,817 | 5% |
| 0.50% | $278,723 | $32,613 | 10% |
| 1% | $249,942 | $61,393 | 20% |
| 1.5% | $224,521 | $86,814 | 28% |
| 2% | $202,047 | $109,288 | 35% |
Notice the gap is about twice the fees themselves. At 1%, the fund takes about $29,000 in fees. But each fee dollar would have kept growing for years, so the real cost is about $61,000.
With a single $100,000 left for 30 years, the gap between 0.03% and 1% is about $190,000.
Why fees matter more than they seem
Fees are certain. Returns aren't. A fund manager may or may not beat the market in a given year, but the fee comes out every year either way.
S&P Dow Jones Indices' SPIVA reports have found, year after year, that most actively managed US stock funds trailed their index over 10 and 15 years once fees are counted. Warren Buffett has often said ordinary investors can do well with a low-cost S&P 500 index fund. In his 2013 letter to shareholders, he wrote that the trustee for his wife's money is told to put 90% of it in a very low-cost S&P 500 index fund and 10% in short-term government bonds.
This doesn't mean every higher fee is wasted. But it means a fund has to earn its fee, every year, just to break even with a cheap one.
What the calculator can't tell you
- Real returns move around. It assumes both funds earn the same return before fees, the same every year. Real markets go up and down, and past returns are no guide to future ones. Fees still compound the same way.
- Other costs. Some funds also charge sales fees (loads), and some advisers charge their own fee on top. Add those to the expense ratio to compare.
- Taxes. It ignores taxes on gains and dividends.
- Which fund is better. A cheaper fund isn't always the right fund. Compare what each one holds, too.
This page is for learning. It isn't advice about what to buy or sell.
Questions
What is a good expense ratio? For an index fund, under 0.20% is low and many charge 0.03% to 0.10%. For an actively managed fund, under 0.75% is on the low side. Lower is better if the funds are otherwise alike.
How is the expense ratio charged? The fund takes it from its own value, a little each day, so you never see a bill. The fund's price and your returns are already after the fee.
Is a 1% expense ratio high? Yes, next to index funds. Over 30 years, a 1% fee can take about a fifth of what your money would have grown to.
Do ETFs have expense ratios? Yes. ETFs and mutual funds both charge them. Many index ETFs have some of the lowest fees available.
Is the expense ratio the only fee? Not always. Some mutual funds add sales charges, and advisers may charge their own yearly fee. Brokers may charge trading fees. Add them up to see the full cost.
Is it free? Yes. No account and no signup.
The next step
Low fees help most when you own good businesses for a long time. If you'd rather pick companies yourself, every night we check about 3,000 US companies for a good business at a fair price. See tonight's list. To see what reinvesting dividends adds over the years, try the free DRIP calculator.