Expense Ratio Impact: $200,000 at 1.5% Fee Over 30 Years
A $200,000 portfolio growing at 6% per year for 30 years loses a significant portion of potential wealth to a 1.5% annual expense ratio typical of active funds.
How to use this tool
- Enter the lump sum you plan to invest.
- Enter the fund's gross annual return before fees.
- Enter the expense ratio (e.g. 0.5%).
- Enter how many years the money stays invested.
- Compare the fee-free value with the after-fee value and the total fees lost.
Understand the long-term wealth destruction of a 1.5% expense ratio on a $200,000 portfolio over 30 years at 6% gross returns.
Frequently asked questions
- What is an expense ratio?
- It is the annual fee a mutual fund or ETF charges, expressed as a percentage of your invested assets. A 0.5% ratio means you pay $5 per year for every $1,000 invested.
- Why do small fees matter so much?
- Fees compound. Each year's fee reduces the balance that could have grown in future years, so over decades a fraction of a percent can erase six figures of wealth on a large portfolio.
- How is the fee impact modelled here?
- The calculator subtracts the expense ratio from the gross return and compounds both rates separately, then reports the difference as the total lost to fees.
- What expense ratio should I look for?
- Broad-market index funds often charge well under 0.10%, while actively managed funds can charge 0.5–1.5% or more. Lower-cost funds keep more of the return in your pocket.