Index Fund Calculator
Expense ratios seem tiny — until you see what they cost you over 30 years. Compare a low-cost index fund vs a high-cost active fund with your exact numbers.
Low-Cost Fund Final Value
High-Cost Fund Final Value
Fee Drag Comparison
Growth at Key Milestones
What fees cost you at every year
| Year | Low-Cost | High-Cost | Fee Cost |
|---|
How Expense Ratios Work
An expense ratio is deducted from the fund's assets daily — you never see a line item charge. A 1.00% expense ratio on a $100,000 balance costs $1,000 in year one. But because that $1,000 doesn't compound for you in year two, three, and beyond, the true cost over 30 years is far greater than the simple sum of annual fees.
The calculator shows both the fees actually paid (direct cost) and the opportunity cost — what those dollars would have grown to if they'd stayed in your portfolio. The opportunity cost typically exceeds the direct fee total by 2–4x after 30 years.
2026 Expense Ratio Reference
| Fund Type | Typical Range | Examples |
|---|---|---|
| Broad market index ETF | 0.00%–0.05% | VTI, SCHB, FZROX |
| Index mutual fund | 0.02%–0.15% | VTSAX, SWTSX |
| Target-date fund | 0.10%–0.75% | Vanguard vs others |
| Actively managed fund | 0.50%–1.50% | Average: ~0.66% |
| Hedge fund / alternatives | 1.00%–2.00%+ fees | Plus performance fees |
Frequently Asked Questions
What is a reasonable expense ratio for an index fund?
The best index funds charge 0.03%–0.10%. Vanguard VTI and Schwab SCHB are at 0.03%; Fidelity FZROX is 0.00%. Anything above 0.20% for a basic market-cap index fund is high. Actively managed funds average around 0.66% as of 2025.
Do index funds actually outperform active funds?
Over long periods, the majority of actively managed funds underperform their benchmark after fees. The S&P SPIVA report consistently shows 80%–90% of active large-cap managers underperform the S&P 500 over 15-year periods. Lower fees are the primary structural reason index funds tend to win.
Is a 1% expense ratio really that bad?
Yes. On a $10,000 initial + $500/month for 30 years at 7% gross return, the difference between a 0.04% and a 1.00% fund exceeds $100,000 in final portfolio value. The fee seems small; the compounded opportunity cost doesn't.
Does expense ratio matter less in a 401(k)?
Expense ratios matter in all accounts. In a 401(k), you don't control the fund menu — but always pick the lowest-cost fund available for your target allocation. Even 0.40% vs 0.04% over 30 years represents tens of thousands of dollars.
What's the difference between expense ratio and management fee?
The expense ratio is the total annual cost including management fee, administrative fees, and 12b-1 marketing fees. The management fee is just the advisor/manager component. Always compare expense ratios — it's the total disclosed on the fund prospectus and Morningstar fact sheet.
Can I switch from a high-cost to low-cost fund?
Yes — but check for tax consequences in a taxable account. Selling appreciated fund shares triggers capital gains taxes. In a 401(k) or IRA, you can switch with no immediate tax impact. The after-tax savings from switching almost always justify the move for funds held in tax-advantaged accounts.