The two portfolios, year by year
| Year | Low-cost ($) | Expensive fund ($) | Difference ($) | % less wealth |
|---|
Deterministic model: each portfolio's net return equals the gross market return minus its fee (low-cost fund ≈ gross − 0.15%; expensive fund ≈ gross − 2.40%). With the default values — $300/month for 25 years — a 2.25-point fee gap between a low-cost index fund and an expensive actively managed fund adds up to roughly $64,000 in final difference. A well-built low-cost index fund's total cost should rarely exceed 0.5% per year. This does not account for taxes, which apply when you eventually withdraw and vary by country and account type.
What each figure means
A quick look at every field and every result.
What you've already saved today. The same gross return applies to both portfolios: the only thing that differs between them is the fee.
What you add each month, the same in both portfolios.
What the market returns before any fee is subtracted. It's identical for both portfolios: the experiment isolates only the effect of cost.
What a low-cost index fund charges per year. A well-built index fund's total cost should rarely exceed 0.5%.
What an actively managed fund typically charges per year — common among funds sold through retail banks.
What's left after applying the low fee over the entire horizon.
What's left with the same market, the same contributions, but a fee several times higher.
The same figure shown twice: how much wealth the fee difference has eaten away, without ever appearing on a statement.
The sum of all the money that came out of your pocket, the same in both portfolios.
How to use this calculator
Steps to compare two fees (expand)
- Enter your starting balance and monthly contribution. These are the base the fee gets applied to, year after year.
- Set the gross market return. It's deliberately the same for both funds: this only compares what each one charges, not how well it picks investments.
- Choose the number of years. This is the input that changes the result the most: the damage from a fee doesn't grow in a straight line — it accelerates.
- Adjust the low-cost fund's fee (TER). 0.15% is a typical default; a well-built index fund's total cost should rarely exceed 0.5% per year.
- Adjust the expensive fund's fee (TER). Look it up in your fund's prospectus or fact sheet, under "expense ratio" or "total annual fund operating expenses." Traditional bank-sold funds often run between 1.5% and 2.5%.
- Look at "extra fees paid." That figure isn't an expense you've seen on any bill — it's final wealth that ends up in someone else's pocket.
Frequently asked questions about this calculator
Why does such a small fee difference turn into so much money?
Because the fee isn't paid once — it's deducted every year from a growing balance, and that deducted amount stops compounding for you, permanently. Over time, the effect compounds just like the investment itself — only working against you.
Is a 2-3% fee realistic for an expensive fund?
Yes: it's a common range for actively managed funds sold through retail banks. This calculator's default value (2.40%) reflects a typical real-world example.
Why do both portfolios get the same gross return?
That's deliberate: the fee is essentially the only variable in this calculation that you fully control. By holding the market return constant in both cases, the final difference you see is exclusively the cost of the fee.
Does this include taxes?
No. This calculator isolates the effect of fees while the money stays invested. Taxes apply when you withdraw, and the rules vary by country and account type.