Visualize how fund expense ratios erode investment returns over time and compare low-cost versus high-cost fund performance.
A difference of a few hundredths of a percentage point can look negligible until it is carried through years of compounding. This calculator compares projected balances for low-cost and high-cost funds using the same investment, return, and time assumptions, then visualizes the dollar gap created by their expense ratios. The common surprise is that the gap is not merely each rate multiplied by the starting balance. Expenses recur as assets change, and amounts lost to expenses no longer participate in later growth.
An expense ratio states annual fund operating expenses as a percentage of average net assets. A 0.20% ratio corresponds to $2 for each $1,000 of assets over a year before allowing for balance changes. It is not normally billed as a separate invoice; fund expenses are reflected in the fund's net asset value and investment return. The calculator expresses that percentage cost in projected dollars.
The two comparison cases hold the entered growth assumptions constant and change the expense ratio, so the resulting balance difference isolates fee drag within the projection. That difference includes direct expenses and the growth those dollars could otherwise have earned. Because the fee is percentage-based and recurring, the projected paths generally separate further as the balance and holding period grow.
No. Lower recurring cost leaves more of an otherwise identical gross return invested, but funds can differ in objective, holdings, tracking quality, risk, tax treatment, liquidity, and other charges. Use this calculator to isolate the consequence of the expense-ratio difference. It does not establish that two funds are equivalent or predict which will earn the higher return.
That shortcut describes only a rough one-year cost on a fixed starting balance. A fund balance changes with investment performance, so the percentage expense also changes in dollar terms. Over multiple years, each amount removed misses subsequent growth or loss. The calculator's ending gap therefore represents accumulated expense drag and its compounding effect, not one charge against the initial principal.
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