Investment Fee Impact Calculator

How to calculate Investment fee impact calculator?

This calculator compares projected balances with and without annual fees by applying the net annual return to your initial investment and yearly contributions.

Key formula: FV = PV*(1 + r_net)^n + A*(((1 + r_net)^n - 1) / r_net) where r_net = r - fee

Using the Investment fee impact calculator calculator: an example

Example values: Initial $10,000; annual contribution $1,000; expected return 7%; fee 0.5%; period 20 years.

Step-by-step calculation:

1. Convert percentages: expected return 7% → 0.07; fee 0.5% → 0.005; net return = 0.07 − 0.005 = 0.065.
2. Calculate FV without fees using r = 0.07: FV ≈ $79,693 for PV $10,000 and annual $1,000 over 20 years.
3. Calculate FV with fees using r_net = 0.065: FV ≈ $74,045 for the same inputs and period.
4. Total fee impact over 20 years ≈ $5,648 less due to the 0.5% annual fee.

Frequently Asked Questions

How do fees reduce my investment returns?

Fees lower the net annual return you actually earn. Over time, compounding magnifies even small differences in net return, reducing the final balance.

Are small differences in fees important?

Yes. A fee difference of a few tenths of a percent can cost thousands of dollars over decades because of compounding.

Does this calculator include taxes or inflation?

No. This tool excludes taxes and inflation. Adjust inputs to reflect after-tax or real returns if you want those effects included.