What is an ETF expense ratio?

An expense ratio is the annual fee a fund charges, expressed as a percentage of assets. It’s typically deducted from the fund’s assets, which can reduce returns over time.

How do ETF fees affect long-term returns?

Fees can reduce the net return you keep each year. Over long time horizons, even small differences can compound into a meaningful gap in ending value.

Does this calculator model ETF fees exactly?

No. This is a simplified educational estimate. It typically models fees as a reduction in annual return and does not account for daily fee accrual, taxes, trading costs, or changing market returns.

What return rate should I use?

Use an illustrative rate to compare scenarios rather than a prediction. Many people test a few rates (lower and higher) to see how sensitive results are to assumptions.

Are higher-fee ETFs ever worth it?

Sometimes. A higher-fee fund may be worth it if it provides enough additional value after fees to justify the cost. This tool focuses on the fee impact so you can see how large the fee headwind can be over time.

ETF Fee Impact Calculator: Learn More

This calculator compares a low-fee and a higher-fee ETF to show how expense ratios can reduce long-term growth through compounding.

What to enter

Starting amount: your current balance or initial deposit.
Monthly contribution: optional ongoing investing amount.
Estimated annual return: an illustrative rate you choose (not a forecast).
Years: the time horizon for the comparison.
Expense ratios: low-fee and high-fee percentages.

How to read the results

Ending value (Low vs High): estimated balances under each fee.
Difference (Fee impact): how much higher the low-fee scenario ends in this simplified model.
Total contributions: starting amount plus all monthly deposits (not including growth).

Important assumptions

Fees are modeled as reducing the return you keep.
Ignores taxes, spreads, trading costs, and changing market returns.
Real-world ETF tracking differences and timing effects aren’t captured here.

Try these quick experiments

Compare 0.03% vs 0.10% over 25–35 years to see how small differences can add up.
Test a lower return (like 4–5%) to see how fees matter more when returns are modest.

Educational use only. Not financial advice.