Mutual Fund Calculator

The expense ratio is the annual fee charged by a mutual fund, expressed as a percentage of assets under management. A 0.50% expense ratio means you pay $50/year for every $10,000 invested. This fee is deducted from returns automatically — you do not pay it separately.

The impact is significant over decades. On a $10,000 investment with $300/month contributions at 8% over 20 years, a 0.50% expense ratio costs about $15,000 in lost growth. At 1.50%, you lose about $42,000. Low-cost index funds save tens of thousands over a career.

Research consistently shows that over 80%–90% of actively managed funds underperform their benchmark index over 15+ years after fees. Low-cost index funds outperform most active funds, which is why Warren Buffett recommends them for most investors.

For index funds, look for expense ratios below 0.20% (Vanguard, Schwab, and Fidelity offer many at 0.03%–0.10%). For actively managed funds, below 0.75% is reasonable. Anything above 1% should deliver consistently superior returns to justify the cost.