How to measure the cost of fees
Compare the same portfolio with and without the fee.
1
Enter the starting balance
Use the current value and any regular contributions.
2
Add the expected return
Use a long-term gross return assumption before fees.
3
Set the fee
Include the expense ratio and any recurring advisory charge.
What does this tool do?
A fee takes a share of assets every year, and the amount lost compounds. Comparing gross and net balances shows the real long-term cost.
The Formula
Balance with fees = Future value at (Gross return − Fee); impact = No-fee balance − Balance with feesFrequently Asked Questions
Is a one percent fee worth paying?
Only if the net result justifies it. Compare the fee with the value added, not with zero cost.
Does this include taxes?
No. It isolates the fee. Taxes, trading costs and advisory fees would reduce the net balance further.