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This content was prepared with an AI-assisted workflow (AI-assisted editorial workflow) for information only, not investment or tax advice. Actual tax and investment outcomes depend on account type, product structure, current rules, and personal circumstances.
Why expense ratios matter more than you think
An ETF’s expense ratio is deducted from the fund’s assets every year, reducing your effective return. A 0.03% fee on a passive index ETF versus 0.60% on an actively managed fund may look trivial, but compounded over 20 or 30 years the gap in final wealth can be substantial. This calculator lets you input any two fee levels and see exactly how they diverge year by year.
Interpreting the difference column
The difference column shows how much more you would have with ETF A compared to ETF B after each year. This is purely the fee drag — the same gross return and contribution schedule is applied to both. Taxes, bid-ask spread, and tracking error are excluded from this model.
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Method and limits
Formula
balanceₘ = balanceₘ₋₁ × (1 + r_month − fee_month) + contribution ; fee_month = expense_ratio / 12
Worked example
Starting at 10,000 USD with 500 USD monthly at an assumed 7% return, after 30 years fund A (0.03% fee) ends near 656,700 USD while fund B (0.50%) ends near 596,100 USD. The ~60,600 USD gap is purely the 0.47pp fee difference compounding for 30 years.
Assumptions
- Returns, yields, and inflation are assumed constant for the whole period at the value you enter. Real markets are not.
- All math runs in your browser; inputs are never sent to a server.
- Currency display uses a fixed exchange rate captured on the date below, not a live rate.
What is not included
- Taxes (dividend/capital gains), trading commissions, currency conversion costs
How to verify this yourself
- Put the same inputs into the formula above in a spreadsheet — you should reproduce these results exactly.
- If you find an error, tell us via the contact page and we will verify and correct it. Contact