What fees cost you
A 1% fee sounds tiny. But it comes out every year, on everything you have, including all the growth. This runs the same plan at two fees side by side, so you can see the difference in dollars.
What the higher fee costs you
$0
- Ending balance at 0.03%
- Ending balance at 1%
- Fees paid at 1%
- Fees paid at 0.03%
- Your money in
Every 5 years
| Year | At 1% | At 0.03% | The gap |
|---|
How the math works
Every month, your balance grows by one twelfth of the yearly return. Then one twelfth of the yearly fee comes out, and your monthly contribution goes in. It's the same monthly math as the compound growth calculator, just with the fee taken out along the way.
The gap ends up bigger than the fees themselves. Every dollar that goes to a fee is a dollar that's no longer in your account growing, so you lose the fee and everything it would have earned. The SEC shows the same thing in its fee bulletin: $100,000 growing 4% a year for 20 years ends at about $208,000 with a 0.25% yearly fee, and about $179,000 with a 1% fee. (The SEC's example works a year at a time. This calculator goes month by month, so the same numbers here come out a little higher, with about the same gap.)
Why it's so easy to ignore
A fund's expense ratio, which basically just means its yearly fee as a percentage of what you have in it, comes out of the fund's value a little bit every day. You never get a bill, and you never see a line for it on your statement. The fund's price is just a bit lower than it would have been.
An adviser's fee works much the same way. It's a percentage of your balance, and it often comes straight out of your account, so you never write a check. That's exactly why it's worth running the numbers once in dollars.
None of this means a fee is never worth paying. If an adviser keeps you from selling everything in a panic, that can be worth a lot. This just shows you the price, so you can decide if you're getting your money's worth. If you'd rather keep it simple, a broad index fund is about as cheap as investing gets.
What this leaves out
Taxes, inflation, and one-time costs like trading commissions or sales loads. It also assumes the same return every single year. Real years bounce around, and past returns aren't guaranteed, so treat the dollar amounts as a picture of how fees compound, not a forecast.
Watch
Sources: SEC Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio (the $100,000 example, and advisory fees charged on the value of your portfolio), SEC Investor Bulletin: Mutual Fund and ETF Fees and Expenses (operating expenses are paid out of the fund's assets), and SEC rules 22c-1 and 2a-4 (a fund's value is figured at least once every business day, with expenses taken out up to that day). The monthly math matches the compound growth calculator. Last checked against these sources on Nov 9, 2026.
An estimate for learning, not advice. I'm a CPA, but I'm not your CPA. Nothing you type leaves your browser. Full disclaimer.