Investment Fee Drag Calculator

About this calculator

A fund's annual fee — its expense ratio, advisory fee or platform charge — looks tiny next to a return: 1% a year sounds harmless. But that fee is skimmed off your whole balance every year, and the money it removes never gets to compound. This calculator grows the same portfolio twice — once at your expected return, once at that return minus the fee — and shows the gap. The difference is your "fee drag": the money the fee silently costs you over the whole horizon. Nothing is converted between currencies; the figures are labelled in whatever currency you pick.

How to read your results

The headline is the total fee drag: how much smaller your final balance is because of the fee. The three stats show the final value with fees, the final value if no fee were charged, and the share of your fee-free growth that the fee consumed. Watch how the percentage balloons with time and rate: a 1% fee over 30 years can quietly take a quarter of what you would otherwise have. The two bars compare the two final balances side by side — the shortfall between them is the drag.

How it's calculated

Let rGross be the expected annual return as a fraction (grossReturn / 100) and rNet be (grossReturn - feePct) / 100. Starting from the initial balance, each year the balance grows by its rate and the annual contribution is added at year end: bal = bal x (1 + r) + contribution. The portfolio is simulated for the chosen number of years twice — at rNet for the with-fees balance and at rGross for the fee-free balance. Fee drag = withoutFees - withFees, and the drag percentage is feeDrag / withoutFees x 100. When the fee exceeds the gross return the net rate is negative and the balance can shrink; the calculation still holds. All money figures are rounded to two decimal places.

Worked example

Invest 100,000, add nothing more, leave it 30 years, expect 7% a year before fees, pay a 1% annual fee.

Without the fee the balance grows to 761,225.50 (100,000 x 1.07^30). With the 1% fee it compounds at 6% and reaches only 574,349.12. The fee drag is 186,876.38 — about 24.6% of the fee-free balance, gone to a fee that looked like "only 1%".

Frequently asked questions

How can a 1% fee cost 25% of my returns?

Because the fee is charged every year on the whole balance, and the money it removes can never compound. Over one year 1% is just 1%. Over 30 years, compounding at 6% instead of 7% leaves you with a final balance roughly a quarter smaller — the lost compounding stacks up far beyond the headline rate.

What counts as the "fee" I should enter?

Enter the total annual cost of holding the investment as a percentage: a fund's expense ratio, plus any advisory or platform fee charged on assets. For a low-cost index fund this might be 0.03–0.10%; an actively managed fund or an advisor wrap can be 1–2% or more. If you pay several layered fees, add them together.

Is the fee taken before or after the return?

This model applies the fee as a reduction to your annual return — it compounds your balance at the gross return minus the fee, which is how an expense ratio works in practice (it is deducted from the fund's assets daily, lowering the return you actually receive). Contributions are added at the end of each year.

What gross return should I assume?

Use a long-run expectation before fees, not last year's number. A broad global stock portfolio has historically returned roughly 6–8% a year nominally over long periods; a bond-heavy mix is lower. The point of this tool is the gap between two scenarios, so keep the gross return the same and vary only the fee to see its cost.

Does this convert between currencies?

No. The currency selector only labels the figures — the engine never converts. Enter every amount in the same currency, and the fee drag is reported in that currency.

Sources

Reviewed by the YouCalc Team · Last reviewedJune 26, 2026