A small number that compounds
A 1% yearly fee sounds tiny. But a fee comes out of your balance every year, and whatever it takes can't compound for you anymore. Over long periods that adds up. In the video example, $10,000 grows for 40 years at a hypothetical 10%: about $452,593 with no fee, and about $314,094 when the return drops to 9% after a 1% fee. The fee costs about $138,498, roughly 31% of the ending balance.
Why the gap keeps widening
The fee's cost isn't just the fee dollars. It's also all the growth those dollars would have earned. That's why the gap by decade grows so fast: a couple of thousand dollars after 10 years, about $42,000 after 30, and $138,000 after 40. Doubling time tells the same story: at 10% money doubles in about 7.3 years, at 9% in about 8.0.
Two ways to model a fee
The common shortcut subtracts the fee from the return (10% − 1% = 9%). That's what the video did, and it's the default here. Fees are often charged as a percentage of the balance, which is slightly different: grow at 10%, then take 1% of the new balance. That costs a little more. The calculator lets you switch between them.
Where fees show up
Fees go by several names: expense ratios on funds, advisory fees, account maintenance fees, and fees inside some retirement plans. They're usually listed as a yearly percentage in a fund's prospectus or a plan's fee disclosure. Comparing them as a yearly percentage lets you plug the difference into this page and see what it means in dollars over your timeline.
Lower isn't the only question
A fee pays for something, whether that's management, advice, or convenience. This page doesn't judge whether any fee is worth it. It shows the math so the trade-off is visible. Try 0.03% or 0.015% to see how close very low fees get to the no-fee line.
Assumptions
Returns are steady and hypothetical, taxes and inflation are ignored, and deposits (if any) go in at the end of each month. Real returns vary year to year, which changes the dollars but not the basic shape.
Sources
- SEC Investor.gov: Compound Interest Calculator
- A. Damodaran, NYU Stern: historical returns on stocks, bonds and bills
Last reviewed: Sep 28, 2026