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Updated 2026-04-20 · Investing · Educational use only ·
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Fee Impact Comparison Calculator

Compare the 20-year end value of two portfolios with different annual fees.

See how two fee levels change the end value of an investment over 20 years — same balance and same return, just two different annual fees.

What this tool does

Fees look small as percentages but compound into large gaps over long horizons. This calculator models two investment portfolios side by side, each starting with the same balance and expected gross return, but charged at different annual fee rates. It calculates the net-of-fee return for each scenario, compounds both annually across your chosen timeframe, and shows the resulting end values. The difference between these two end values represents the cumulative cost of the higher fee. The calculation assumes fees are deducted annually and that gross returns remain constant. Results are illustrative only and don't account for tax, inflation, or variation in actual returns over time.

Quick answer: with the default values, the result is $80,980.60 (Cost of Higher Fee Over Period). Adjust the values below for your own figures.

Enter Values

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Formula Used
Starting balance
Gross return rate
Two fee levels
Years

Disclaimer

Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.

100,000 at 7% gross return over 20 years ends at 386,968 with no fees. At 0.2% fees, end value is 372,756. At 1.5% fees, end value drops to 291,776 — roughly a 81,000 gap versus the low-cost option, for the same underlying return. Fees don't affect gross return; they eat into compounded final value. Big difference.

What the result means

Primary is the cost of the higher fee — the gap in end value between the two scenarios. Secondary shows each end value and the fee spread in percentage points. Over 20 years the compound effect is always larger than the percentage spread suggests.

Real-world implication

This is a common argument made for index investing over active management: most active funds don't tend to exceed their benchmark net of fees, and the fee drag compounds steadily. The compound gap over a full career of investing can be a meaningful share of final retirement wealth.

A worked example

Take a starting balance of 100,000, gross annual return of 7%, low fee of 0.2%, high fee of 1.5%. The tool returns 80,980.60.

What moves the number most

The result responds to Starting Balance, Gross Annual Return, Low Fee, High Fee, and Years.

The formula behind this

Net return in each scenario is gross minus fee. Both compound annually from the same starting balance over the same horizon. The gap between end values is the extra cost imposed by the higher fee, compounded across time.

Example Scenario

A 7% annual return over 20 years creates a $80,980.60 difference between 0.2% and 1.5% fee portfolios.

Inputs

Starting Balance:£100,000
Gross Annual Return:7%
Low Fee:0.2%
High Fee:1.5%
Years:20
Expected Result$80,980.60
Expected Result breakdown
Low-Fee End Value$372,756.35
High-Fee End Value$291,775.75
Fee Spread1.30%
Years20

This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.

Sources & Methodology

Methodology

The calculator computes the end value for each portfolio by applying compound growth over the specified time period. For each scenario, the net annual return is calculated by subtracting the annual fee from the gross return. Both portfolios start with the same initial balance and grow at their respective net rates, compounded annually. The fee impact gap is derived by subtracting the final value of the lower-fee portfolio from the higher-fee portfolio, showing how fee differences accumulate through compounding over time. The model assumes constant annual returns and fees throughout the period, applies fees as a fixed percentage of the portfolio annually, and does not account for market volatility, tax effects, rebalancing costs, or changes in fee structures.

Frequently Asked Questions

Is this nominal or real?
Whatever you enter. Use nominal return for nominal gap; real return (net of inflation) for inflation-adjusted gap.
Why does 1.3% of fees cost over 20% of end value?
Compounding. Each year's return is a percentage of the balance; higher fees mean a smaller balance each year, which earns less next year, compounding the shortfall. Over 20 years it snowballs.
What about platform fees on top?
Add them to the fund fees. The tool treats total fee as a single number; if you have 0.25% platform + 0.75% fund, enter 1.0%.
Are high-fee funds ever worth it?
Only if they consistently exceed benchmarks by more than the fee gap, net. Most don't — decades of research show active funds underperform low-cost benchmarks on average. Use this tool to see what outperformance you'd need to justify the fee.

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