Understanding your result
The balance difference combines fees and the growth that money could otherwise have earned. Cumulative fees charged show only direct deductions. A negative difference means option B finishes with the larger balance under the selected assumptions.
For a broader contribution and inflation scenario without comparing two fee schedules, use the Investment Growth Calculator with a return assumption that reflects the costs you intend to include.
The formula
The fee is applied once per year to the balance after gross growth. New annual contributions arrive after that fee and begin earning the following year. Both options start with the same capital, contributions, and gross return so the comparison isolates the entered fees.
A one-year fee comparison
Start with 1,000, earn 10% before fees, and add 100 at year-end. A 1% fee deducts 11 from 1,100 and leaves 1,189 after the contribution. A 2% fee deducts 22 and leaves 1,178, a difference of 11.
How to use this calculator
- Enter starting capital and the amount added at each year-end.
- Use a gross return before the two fees being compared.
- Enter each annual fee and inspect the final difference and accumulated direct charges.
Avoid deducting the same expense twice
A published fund return may already reflect operating expenses. Subtracting an expense ratio again from a net return would overstate the impact. Use a gross assumption for this controlled comparison, or confirm which costs are already reflected in your starting return figure.
Actual funds can accrue charges daily, use different fee bases, apply tiered schedules, or charge transaction and advisory fees separately. This annual model describes one transparent convention. It does not establish that two real investments will have the same performance or risk before fees.
Assumptions & limitations
What this calculation assumes
- Asset-based fees are charged annually after growth.
- Annual contributions arrive after the fee deduction.
- Gross return is identical for both options.
What to keep in mind
- Taxes, transaction costs, performance fees, and fee tiers are excluded.
- The comparison does not evaluate investment quality, risk, or suitability.
Common questions
Why can the balance gap exceed the fees paid?
Money removed as a fee cannot earn subsequent returns. At positive returns, that lost compounding can make the final gap larger than direct charges.
Can option A cost more?
Yes. The labels do not imply a preferred option. A higher fee for A can produce a negative A-minus-B balance difference.