Compare two funds with different expense ratios. See exactly how much a higher fee costs you in final wealth over your investment horizon.
Initial lump-sum investment
Added each year (can be 0)
Expected market return before fees
e.g. 0.03% for VOO, 0.04% for VTI
e.g. 0.5–1.5% for active mutual funds
1–60 years
An expense ratio is the annual fee a fund charges as a percentage of assets under management. A 1% expense ratio on a $100,000 portfolio costs $1,000 per year — but the real cost is the compounding returns lost on that $1,000 every single year.
Because fees are deducted from returns before compounding, the damage amplifies over time. A 0.95% fee difference might sound trivial, but on a 30-year investment horizon it can consume 20–30% of your final wealth. Low-cost index funds (0.03–0.20%) exist in nearly every asset class.
| Fund type | Typical ER |
|---|---|
| Broad index ETF (VOO, VTI) | 0.03–0.05% |
| Target-date index fund | 0.10–0.20% |
| Active large-cap mutual fund | 0.50–1.00% |
| Active small-cap / sector fund | 0.80–1.50% |
| Annuity / insurance product | 1.50–3.00% |
No — this calculator shows pre-tax wealth differences. In taxable accounts, higher-turnover active funds may also generate more taxable events, compounding the cost beyond the stated ER.
Possible, but rare over long periods. Research consistently shows that fewer than 20% of active funds beat their benchmark net of fees over 20+ years. The fee drag makes outperformance the exception, not the rule.
No — also look at bid-ask spread, trading commissions (rare now), and tax efficiency (fund turnover ratio). For ETFs, the net expense ratio shown by the fund company is usually the dominant cost.