Investment Fee Calculator

Related Calculators

Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

Advisor pricing: The way an advisor charges, such as a percent of the account, tiered percent rates, or a flat yearly dollar fee.

Expense ratio: A fund's yearly operating cost shown as a percent of fund assets [1].

Front-end load: A sales charge taken when money is invested, before the rest is put to work [2].

Starting recurring yearly fee rate: The estimated yearly advisor plus fund cost at the starting balance. It does not include front-end loads.

Total fees and lost growth: The no-fee ending balance minus the after-fee ending balance. It includes fees paid and the growth those fee dollars could have earned.

Fees paid from the account: The dollar fees deducted during the projection, including load fees, advisor fees, and fund expense fees.

Mistake: Entering the Expected return before fees as a monthly return.
Fix: Use an annual percent for Expected return before fees, such as 6 for 6% per year.

Mistake: Leaving Advisor fee blank because the Advisor pricing choice looks clear.
Fix: If Advisor pricing is Percent of account each year, enter Advisor fee as a percent per year.

Mistake: Putting a flat fee into Advisor fee instead of Flat advisor fee.
Fix: Choose Flat $ fee each year under Advisor pricing, then enter the yearly dollar amount in Flat advisor fee.

Mistake: Making Second tier ends at lower than First tier ends at.
Fix: For tiered Advisor pricing, set Second tier ends at to a higher dollar amount than First tier ends at.

Mistake: Forgetting Fund expense ratio when comparing funds with advisor fees.
Fix: Open Advanced options and enter Fund expense ratio so the product-level yearly cost is included.

Mistake: Reading Fees paid from the account as the full cost of fees.
Fix: Use Total fees and lost growth for the full drag because it also includes Growth missed because fees were removed.

• The projection uses one constant Expected return before fees for every month. Real investment returns change over time.
• Recurring percent fees are applied monthly using one-twelfth of the yearly rate. Actual firms and funds may calculate fees daily, quarterly, or on a different balance.
• Taxes, trading costs, bid-ask spreads, account minimums, and withdrawal rules are not included.
• Front-end load is applied to the Starting investment and each Monthly contribution before the remaining money is invested.
• Flat advisor fees can empty a small account. If that happens, the calculator deducts only the available balance and does not let the account go below $0.
• Tiered Advisor pricing uses blended tiers: each part of the balance is charged at the rate for its tier.
• The output is a planning estimate, not a quote from an advisor, broker, fund company, or tax professional.

Projection setup

The calculator compares two month-by-month balances. Ending balance with no fees uses the same Starting investment, Monthly contribution, Expected return before fees, and Years invested, but removes advisor fees, fund fees, and loads. Ending balance after fees applies the selected fee stack.

monthly_return = (1 + gross_return_percent / 100)^(1 / 12) - 1

Months invested equals Years invested times 12. The calculator validates years as whole years, so the loop uses a whole number of monthly steps.

Cash added and front-end load

A Front-end load is taken before new cash is invested. This applies to the Starting investment at month 0 and to each Monthly contribution.

load_fee = cash_added * front_load_percent / 100

invested_cash = cash_added - load_fee

Recurring fee calculation

For Percent of account each year, the advisor fee rate and Fund expense ratio are added, then charged monthly after that month's growth.

monthly_fee = balance_before_fee * ((advisor_aum_percent + expense_ratio_percent) / 100 / 12)

For Tiered percent of account, the advisor fee is blended across tiers. The fund expense fee is added separately.

tiered_annual_fee = min(balance, tier1_limit) * tier1_fee_percent / 100 + min(max(balance - tier1_limit, 0), tier2_limit - tier1_limit) * tier2_fee_percent / 100 + max(balance - tier2_limit, 0) * tier3_fee_percent / 100

monthly_tiered_advisor_fee = tiered_annual_fee / 12

For Flat $ fee each year, the yearly dollar amount is divided by 12. If the balance cannot cover the monthly fee, the calculator deducts the remaining balance only.

flat_monthly_fee = flat_annual_fee / 12

Monthly balance loop

The gross balance ignores all fees. The net balance applies loads before investing new money, then applies recurring fees after monthly growth. Values are not rounded inside the loop.

gross_balance = (gross_balance + monthly_contribution) * (1 + monthly_return)

net_balance = (net_balance + invested_contribution) * (1 + monthly_return) - recurring_fees

Final outputs

Total fees and lost growth is the main fee-drag number. It can be larger than Fees paid from the account because removed fee dollars also miss future growth.

total_fees_and_lost_growth = gross_ending_balance - net_ending_balance

lost_growth_on_fees = total_fees_and_lost_growth - total_fees_paid

ending_balance_reduction_percent = total_fees_and_lost_growth / gross_ending_balance * 100

starting_recurring_fee_rate = starting_yearly_advisor_fee / initial_investment * 100 + expense_ratio_percent

If gross ending balance is 0, the ending balance reduction percent is shown as N/A. If Starting investment is 0, the starting recurring yearly fee rate is N/A for flat and tiered pricing because the calculator cannot divide by 0.

Mini-example

For a $10,000 Starting investment, $0 Monthly contribution, 0% Expected return before fees, 1 Year invested, 1% Advisor fee, 0% Fund expense ratio, and 0% Front-end load, the no-fee balance stays $10,000. The after-fee balance is about $9,900.46 because the 1% yearly advisor fee is charged in 12 monthly pieces. Total fees and lost growth is about $99.54, and Growth missed because fees were removed is $0 because the return was 0%.