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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