Why a 0.1-Point Fee Difference Isn't Small
Retirement accounts like a 401(k) or IRA are usually held for decades, so even a tiny difference in a fund's annual expense ratio compounds into real money. A 0.75% expense ratio versus a 0.05% index fund might sound trivial year to year, but on a $30,000 balance held for 30 years, that gap alone can add up to well over $6,000 in fees on this simplified estimate. This calculator compares two funds' expense ratios over your investment horizon and shows the total fee gap between them, using a simplified flat-balance method. Checking a fund's expense ratio before you invest is one of the easiest ways to keep more of your long-term returns.
How It's Calculated
| Step | Item | Formula |
|---|---|---|
| 1 | Annual Fee | Balance × Expense Ratio |
| 2 | Total Fees | Annual Fee × Years |
| 3 | Comparison | Fund A Total Fees vs. Fund B Total Fees |
Frequently Asked Questions
It's a fund's annual operating cost as a percentage of your balance, deducted automatically from returns and compounding against you every year you hold the fund.
Yes — over decades, that percentage applies to a growing balance, so the dollar gap widens every year you hold the fund.
※ Simplified reference estimate assuming a constant balance; actual fees vary with contributions and returns.