Financial education tool
Expense ratio calculator
Compare how two hypothetical annual fund expense ratios may affect a long-term balance. The calculator uses the same return and contribution assumptions for both scenarios so the fee difference is easier to see.
Inputs
Compare two fee scenarios
Change any assumption below. Results update automatically and are educational estimates, not forecasts.
Modeled as a contribution at the end of each year.
Use the same assumed gross return for both fee scenarios.
Estimated outcome
Long-term fee comparison
Scenario A ending balance
$551,902
Expense ratio: 0.75%
Scenario B ending balance
$636,327
Expense ratio: 0.05%
- No-fee hypothetical ending balance
- $642,887
- Estimated fee drag — Scenario A
- $90,986
- Estimated fee drag — Scenario B
- $6,560
- Difference between the two ending balances
- $84,426
- Total amount contributed
- $190,000
Under these assumptions, Scenario B produces the higher modeled ending balance. This does not mean one real fund will outperform another: actual investments can have different returns, risks, tracking, taxes, trading costs and other characteristics.
Methodology
How the calculator models expense-ratio drag
An expense ratio is an annual fund operating-cost percentage. Even a small percentage can matter over long periods because the cost reduces the amount that remains invested and able to compound.
This calculator keeps the starting balance, annual contribution, assumed gross return and time horizon identical across both scenarios. It then changes only the annual expense ratio. A third zero-fee path is shown as a mathematical reference point, not as a realistic claim that an investment has no other costs.
For each modeled year, the existing balance receives the hypothetical gross return, the selected expense ratio reduces that balance, and the annual contribution is added at year-end. The model uses annual steps for clarity rather than attempting to reproduce the daily accounting of a specific fund.
Why compare the same return assumption?
Holding the gross-return assumption constant isolates the mathematical effect of the fee. Real funds can perform differently for many reasons, so this tool should not be used to predict which fund will produce the higher actual return.
What to compare beyond expense ratio
Cost is only one characteristic. Investors may also examine investment objective, holdings, diversification, risk, tracking approach, liquidity, taxes and other relevant features. A lower expense ratio does not by itself establish that an investment is appropriate for a particular person.