Fee Impact Comparison Calculator

100,000 at a 7% gross return over 20 years ends at 386,968 with no charges at all. At 0.2% annual fees the end value is 372,756; at 1.5% it is 291,776, an 80,981 gap against the low-cost option, for the same underlying return. Fees do not change the gross return; they compound out of the final value. Those figures are the sample set used across this page.

What the result means

The primary result is the cost of the higher fee: the gap in end value between the two scenarios. The secondary rows show each end value, the spread between the two charges in percentage points, and that gap as a share of the low-fee end value. The share is the figure that carries the point, and it moves with the horizon rather than sitting near the fee spread. On the sample figures a 1.30-point spread costs 1.22% of the low-fee end value after one year, which is below the spread itself; it passes the spread in year two at 2.42%, reaches 11.53% at ten years, 21.72% at twenty and 38.73% at forty.

Real-world implication

Fee drag compounds the same way returns do, which is why a spread that reads as a rounding error in percentage terms becomes a large share of the final balance across a working lifetime. The arithmetic here says nothing about whether a higher-charging option earns its cost: it holds gross return identical across both scenarios in order to isolate the charge, so any difference in performance sits outside the model.

A worked example

The Example Scenario block below shows the sample figures alongside each result row they produce.

What moves the number most

The five inputs do not carry equal weight, and the ordering between them is not fixed. It moves with the horizon and with how close the two charges sit. Three relationships govern it.

Starting Balance is exactly proportional, always. It factors out of both sides of the subtraction, so a 1% change moves the gap by 1% and leaves the share untouched.

The two fee levers pull in opposite directions (raising the higher charge widens the gap, raising the lower one narrows it), and their size is governed roughly by the fee level divided by the spread between them, less closely over long horizons. It is why the same 1% change moves the result +1.02% for High Fee and −0.17% for Low Fee at the sample figures, but +5.89% and −5.09% between charges of 1.0% and 1.2%.

Gross Annual Return vanishes entirely at a one-year horizon. The gap is then the spread applied once to the balance and nothing else, 1.3% of it at the sample charges, whether the return is 2%, 7% or 15%. It builds from there, reaching 1.26 by twenty years. Years behaves differently: it stays above proportional at any gross return above roughly 1%, and slips just below at lower returns. At the sample charges and a 7% return it sits at 1.06 after one year, already above the balance lever, and grows to 2.22 at twenty years and 4.73 at sixty.

On the sample figures the resulting order, measured as the effect of a 1% change in each input, is Years +2.22%, Gross Annual Return +1.26%, High Fee +1.02%, Starting Balance +1.00%, Low Fee −0.17%. Years is stepped in whole years, so the smallest change actually enterable there is +1 year rather than +1%, which moves the result +11.48%. At a single-year horizon, or with the two charges sitting close together, High Fee leads instead.

The formula behind this

Net return in each scenario is the gross return minus that scenario's charge. Both balances compound annually from the same starting point across the same horizon, and the gap between the two end values is the cost the higher charge imposes over the period.