Fee drag over 30 years
Fund growth projectors show you the gross-return curve and skip the line for their own expense ratio. Same investment, three fee scenarios, three end balances. The gap is real and it compounds.
Inputs
What's currently in the account.
What you add at the end of each month.
Before fees. Long-run S&P 500 nominal: ~7%.
Three scenarios to compare
Set the all-in annual fee for each — expense ratio plus any advisor fee, plus any 12b-1 fee. Same investment, different fees.
Broad-market index fund: ~0.03–0.10%.
Typical actively-managed mutual fund.
Actively managed + advisor AUM fee stacked.
End balance — each scenario
Assumptions and formula →
Future-value formula (ordinary annuity): FV = P × (1+r)^n + C × ((1+r)^n − 1) / r, where P is the starting balance, C is the monthly contribution (end-of-period), r is the monthly net return, and n is total months. End-of-period contributions are the US retirement-account convention.
Net return = gross annual return − all-in annual fees, then divided by 12 to get the monthly rate. The arithmetic subtraction is the industry convention. Real funds deduct expense ratios continuously from NAV, but at the fee scales here (0.05–1.5%), the difference between continuous and discrete annualization is well below a basis point and operationally invisible.
What counts as “fee”?Put the all-in number in. That’s the fund’s expense ratio + any 12b-1 fee + any advisor AUM fee + an honest estimate of trading-cost drag (spreads, PFOF) inside the fund. The 1.5% default for Scenario C reflects a fund-of-funds with an advisor on top — common, not rare.
What this doesn’t model:inflation, taxes, withdrawals, or a return that varies year to year. The output is nominal pre-tax dollars under a constant gross return — the same assumption the institution’s growth projector uses, so the comparison is apples to apples.
Read the long-form derivation: Calculator 3 — Fee drag over 30 years →